Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — WALES

Mold bypass

Mr. Raffan: asked the Secretary of State for Wales if he will make a statement on the starting date for the construction of the proposed Mold bypass.

The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): Subject to the satisfactory completion of engineering design and statutory procedures we expect the scheme to be ready to start in the period January 1988 to December 1990. This accords with the provisional programme set out in "Roads in Wales 1985".

Mr. Raffan: Is my hon. Friend aware that any delay in starting the construction of the Mold bypass will seriously hinder the industrial development and creation of jobs on the Bromfield park industrial estate and the Nercwys road industrial park at Mold? In view of the danger that that could mean the loss of industrial momentum in Delyn, which the Government have done so much to promote, will he seriously consider reverting to an earlier starting date?

Mr. Roberts: I assure my hon. Friend that there has been no delay. However, it is not really a practicable proposition to advance the start of the scheme. We are already working to the earliest possible start date.

Radioactive Discharges

Mr. D. E. Thomas: asked the Secretary of State for Wales how regularly his Department monitors radioactive discharges from nuclear installations into the environment in Wales; and if he will make a statement.

The Parliamentary Under-Secretary of State for Wales (Mr. Mark Robinson): Monitoring of radioactive discharges from nuclear installations in Wales is carried out by Her Majesty's radiochemical inspectorate on our behalf. Its programme includes quarterly sampling of liquid discharges from both Trawsfynydd and Wylfa power stations. This is in addition to monitoring by the operators themselves to meet Welsh Office requirements.
The effects of discharges to the atmosphere and to the aquatic environment are monitored on our behalf by the food science division and the fisheries radiological inspectorate of the Ministry of Agriculture, Fisheries and Food.

Mr. Thomas: I thank the Minister for his reply. Will he confirm the information that I have been given by the

Central Electricity Generating Board, that the discharge from Trawsfynydd, which included some radioactive particulate matter, did not present any radiological hazard to the public?

Mr. Robinson: I am able to confirm that. The incident at Trawsfynydd is now under investigation, and reports from various bodies are expected in the near future.

Mr. Grist: Will my hon. Friend see that his Department constantly gives every reassurance to the public on the safety of nuclear power generation? Nuclear power is of great advantage to many of our competitors and to the people of Scotland, who get cheaper electricity because 40 per cent. of it is generated by nuclear power?

Mr. Robinson: I can give that assurance. My right hon. Friend the Secretary of State for Energy illustrated that point a few days ago when he said that the safety record of the nuclear industry in the United Kingdom continues to be second to none.

Mr. Roy Hughes: Is the Minister aware that the public are becoming increasingly concerned about the hazards posed by nuclear installations? For example, does he realise that there is a recognition in the Severnside area that it needs another such power station like it needs a hole in the head? If the CEGB attempts to walk in the face of popular feeling, it will meet the strongest possible resistance.

Mr. Robinson: I strongly refute the comments made by the hon. Gentleman. Authorisation of discharges in Severnside rests with my right hon. Friends the Secretary of State for the Environment and the Minister of Agriculture, Fisheries and Food. Aquatic monitoring of the Severn takes place regularly, and sites in Gwent are included in the station monitoring procedures. The Welsh Office keeps in close touch with all Departments concerned. The public can rest assured that monitoring is carried out effectively and continuously.

Sir Raymond Gower: Is it not a fact that the nuclear power industry has had a remarkable history of safety rather than of danger? To that extent, has it not been much safer than other industries, including even the coal industry?

Mr. Robinson: I thank my hon. Friend for that remark. I can confirm that that is the case. It is important not to get carried away by scare stories which do not have any basis in reality.

EC Farm Prices

Mr. Livsey: asked the Secretary of State for Wales what representations he has received from Welsh livestock farmers about the negotiations on European Community farm prices; and if he will make a statement.

Sir Raymond Gower: asked the Secretary of State for Wales what representations he has received from farmers in Wales and in the area of Vale of Glamorgan council, respectively, concerning negotiations on European Economic Community farm prices; and if he will make a statement.

The Secretary of State for Wales (Mr. Nicholas Edwards): I and my officials have already met both farming unions on several occasions for substantive discussion on the European Community farm price


proposals for 1986–87. I have carefully noted their views, and they will be taken into account in the forthcoming negotiations. I have had no separate representations from farmers in the Vale of Glamorgan council area.

Mr. Livsey: Does the Secretary of State agree with his right hon. Friend the Minister of Agriculture, Fisheries and Food that farmers in Wales should receive less in the current price review than they did last year?

Mr. Edwards: I am sure that price restraint is necessary if we are not to continue to increase the already very large surpluses in the Community. Indeed, that position has been generally accepted by the farmers unions in their discussions with us. I should be interested to hear whether it is the view of the Liberal party that we should seek to boost the wasteful surpluses.

Sir Raymond Gower: Is my right hon. Friend optimistic or otherwise about the outcome of the negotiations?

Mr. Edwards: Clearly there is a difficult period of negotiation ahead. The Community has now enlarged. One of our principal objectives in the negotiations is to see that none of the measures discriminates against British farmers, but that British farmers are fairly treated alongside farmers in the other Community countries.

Mr. Harvey: In view of the sharp fall in farm incomes last year, will my right hon. Friend guarantee that, in particular, the sheepmeat regime, which is vital for many hill producers in Wales, is preserved?

Mr. Edwards: I share my hon. Friend's view about the importance of the sheepmeat regime. Indeed, it is because of the success of that regime and the fact that we are not so dependent on cereals in Wales that the fall in farm incomes in Wales was so much less than in the rest of the United Kingdom. The Commission's proposals envisage the continuation of the sheepmeat regime in substantially its present form.

Mr. John: As reform of the common agricultural policy is intertwined with this year's price proposals, does the Secretary of State accept that the Commission's proposals on both beef and sheepmeat discriminate against the present United Kingdom farm structure and must be changed?

Mr. Edwards: I agree that there are discriminatory proposals before us. When I started answering this question, I said that one of the Government's principal objectives was to resist the Commission's discriminatory proposals, which apply in the cereal sector as well in the two sectors mentioned by the hon. Gentleman.

Mr. McQuarrie: Does my right hon. Friend accept that hill and upland farmers in Wales suffer the same problems as those in Scotland? Will he ensure that in any negotiations within the Community the beef premium is maintained, because it is essential for those rural areas?

Mr. Edwards: I assure my hon. Friend that we attach the same importance to the beef premium scheme in Wales as he does to the scheme in Scotland. As he knows, there are proposals for reforming the beef regime generally. There may be a need for general reform, but we attach great importance to the beef premium scheme. However, it will be a difficult negotiation, because our views on the scheme are not shared by most other members of the Community.

Mr. D. E. Thomas: Does the Secretary of State, who is responsible for agriculture in Wales, intend to take part in the negotiations?

Mr. Edwards: I do not intend to go to Brussels because I do not believe that that would strengthen our negotiating position. The proper way to protect the interests of different parts of the United Kingdom is to see that we meet the farmers unions, discuss the proposals in detail and then present a single negotiating position within the Community. It is already difficult enough to present sensible negotiations in a Community of Twelve. I do not believe that we strengthen the Welsh case by trying to isolate ourselves. Anyone who thinks that simply does not understand either the nature of the Community or what is really important for Welsh farmers.

Dr. Roger Thomas: the Secretary of State is prepared to travel abroad on behalf of Wales and to listen to the Farmers Union of Wales, why does he not do a proper job and visit Brussels on behalf of the farmers of west Wales? Is the right hon. Gentleman aware that 10 per cent. of farmers in west Wales are in dire financial straits and that they would be glad to see him go to Brussels and do a proper job for Wales?

Mr. Edwards: I am flabbergasted by the hon. Gentleman's remarks. If there is one thing that the farmers of west Wales understand, which the hon. Gentleman does not, it is that they benefit from being part of the general arrangements for the purchasing of milk and for the support of agriculture. They know that they gain enormously from being part of the England and Wales arrangements and that it would be a total catastrophe for them if they were isolated or separated from arrangements which are of such benefit to them.

Labour Statistics

Mr. Roy Hughes: asked the Secretary of State for Wales what are the latest unadjusted figures for unemployment in (a) Newport, (b) Gwent and (c) Wales; what were the equivalent figures in May 1979; and what was the percentage increase in each case.

Mr. Nicholas Edwards: The unadjusted February 1986 figures for Newport, Gwent and Wales are 213,288, 30,602 and 188,405. Unadjusted figures for 1979 were produced on a different basis and cannot properly be compared with this year's figures.

Mr. Hughes: Is the Secretary of State not concerned about the mounting redundancies and closures in the area? The recent example of Standard Telephones closing its electronics factory at Newport is but a case in point. On the Secretary of State's recent visit to Japan, was he able to capitalise, by way of new investment, on the good will which I found on my recent visit shortly before his?

Mr. Edwards: I cannot say that all the Japanese industrialists whom I saw had the name of the hon. Member for Newport, East (Mr. Hughes) on their lips. I do not know what influence he may have had for goood or evil, but I am certain that in the coming months there will be further significant investment by Japanese companies in Wales and that that investment will far exceed the job losses to which the hon. Member referred.

Mr. Raffan: When will the two pilot schemes announced in the Budget—job start and job counselling


—for the long-term unemployed be implemented and extended throughout Wales? How many extra staff will be taken on at jobcentres in Wales to ensure that job counselling is effective and covers all the long-term unemployed?

Mr. Edwards: We shall put the new schemes into operation as quickly as possible. I am meeting the chairman of the Manpower Services Commission this week to discuss the detailed implementation and the exact numbers that are to be applied in Wales. In advance of that meeting I would rather not add to my general comments.

Mr. Geraint Howells: Is the Secretary of State able to tell the House when the unemployment figures for Wales will take a downward trend, because during the past seven years they have been going up and up?

Mr. Edwards: The hon. Gentleman has asked that question on so many occasions he should know the answer. I have no intention of making such forecasts. However, I can tell him that very substantial capital investment in industry is taking place in Wales. We are continuing to attract about 20 per cent. of the inward investment for the whole of the United Kingdom, and we have recently had some notable successes, such as attracting Renishaw to Cwmbran. We know of a considerable number of major new investments which will create jobs in Wales and which will be announced in the coming months.

Mr. Gwilym Jones: Does my right hon. Friend agree that last week's Budget was the best prescription for the country continuing to generate more new jobs faster than all other countries in Europe?

Mr. Edwards: I agree that the Budget will contribute to more new jobs. It also confirms that the Government's underlying policies are leading to continued growth faster than elsewhere in the Community, and to falling inflation. We have introduced a tripartite package of measures designed to help enterprise, the young and the long-term unemployed. They are in addition to the substantial range of measures that we have already announced to help the unemployed and to improve youth training.

Mr. Rogers: Does the Secretary of State accept that the measures that he says have been undertaken are simply not working? Is he aware that on the Penrhys housing estate, which has a community of 3,000 people and unemployment of over 80 per cent. among both young and old, severe problems are being caused because the measures that the Government have introduced are not working? Why does the Secretary of State not accept that and do something positive instead?

Mr. Edwards: The hon. Gentleman has asked me to do something positive. I remind him that the Government have introduced the priority estates programme, which is already beginning to result in improvements on the estate that he has mentioned. I hope that the hon. Gentleman is not running down an important programme which is designed to improve conditions on an estate which has been in its present state for some years, and which was not built under the auspices of this Government. We have taken positive measures, which have been greatly welcomed, and I believe that they will improve conditions on the estate to which the hon. Gentleman referred.

Mr. Best: Contrary to what the hon. Member for Rhondda (Mr. Rogers) said, is it not a fact that the special

employment measures that the Government have introduced are working extremely well? For example, is it not a fact that 61 per cent. of those who become part of the enterprise allowance scheme are still trading two years after having joined it?

Mr. Edwards: Yes, I believe that is right. I have no doubt that the scheme has been extremely successful.

Mr. Rowlands: A couple of weeks ago the Secretary of State announced his valley community investment scheme, and there were high hopes that the Budget would bring additional moneys for the Welsh Development Agency and the construction industry. Why has the right hon. Gentleman been left so empty handed after the Budget? Our valley communities need new investment through the WDA.

Mr. Edwards: If an earlier question had been asked, I would have said that the WDA, which has spent about £624 million between January 1976 and March 1986, will be spending about £76·8 million in 1986–87. That is substantial expenditure. There will be a great deal spent in the valleys, including expenditure on derelict land. As I told the House during the Welsh day debate, the expenditure of the WDA will be directed especially at making effective the valleys' initiative, which I launched and which the hon. Gentleman supported, and for whose support I am grateful.

Killan Fach Farm, Dunvant, Swansea

Mr. Gareth Wardell: asked the Secretary of State for Wales when his Department delivered the letter sent on 24 February to the Parliamentary Under-Secretary, the hon. Member for Newport, West (Mr. Robinson) from the hon. Member for Gower to the inspector holding the public inquiry at the Guildhall, Swansea, on 5 and 6 March into an appeal for residential development at Killan Fach farm, Dunvant, Swansea.

Mr. Mark Robinson: A copy of the hon. Member's letter was sent by first-class post from the Department's Cardiff office to the inspector's home address on 3 March.

Mr. Wardell: To avoid any future possible embarrassment to right hon. and hon. Members, will the Welsh Office ensure that when Members of this place attend public inquiries steps are taken to enable inspectors to receive their submissions before the inquiries commence?

Mr. Robinson: We do whatever we can in these matters. The inspector was informed that the representation was on its way. Unfortunately, its delivery was delayed and it did not arrive on time. The hon. Gentleman's original letter was received by the Department only on 26 February, so time was short in any event. I assure the hon. Gentleman that we are reviewing our arrangements to try to ensure that this sort of thing does not happen again.

Ogwr

Mr. Ray Powell: asked the Secretary of State for Wales why he refused to meet representatives from Ogwr borough council to discuss the proposed return of Ogwr's regional development status and of related matters.

Mr. Nicholas Edwards: As has been explained in various letters sent to the borough's chief executive officer


by my office, there is no possibility of the assisted area map being revised so soon after the major changes of November 1984. In the circumstances, a meeting with representatives of the borough council to discuss a change in the status of Ogwr would not have served any useful purpose.

Mr. Powell: The Secretary of State will be aware that the council in its letter requested him or the Prime Minister to meet it, and it outlined the difficulties and problems in Ogwr borough. Does the right hon. Gentleman understand that there are 10,000 unemployed in the area and only 300 job vacancies? Every pit in the Ogmore and Ogwr borough area has been closed since the Governent came to office in 1979. Surely the right hon. Gentleman should have attended a meeting to discuss the problems which are besetting the coalfield area of Ogwr, or, in the interests of Ogwr, borough and its residents, prompted the Prime Minister, in the time that she is devoting to invest in stocks and shares, to attend such a meeting.

Mr. Edwards: I am aware of the problems of that borough. We were asked to meet to change the arrangements under which regional policy is administered, and we have made it clear that now is not the time to do that. We have, however, approved an urban programme allocation for 1986–87 which is more than double the allocation given to 1985–86. I have therefore met my commitment to the hon. Gentleman on that point. Since the review of regional policy carried out in 1984, offers of assistance totalling more than £2·5 million have been accepted in the Bridgend travel-to-work area. Those projects will create 500 new jobs and safeguard more than 100 existing jobs.

Rural Areas

Mr. Best: asked the Secretary of State for Wales what guidance he gives to the Welsh Development Agency on the priority to be accorded to the rural areas of Wales in its various activities.

Mr. Nicholas Edwards: The Welsh Development Agency's corporate plan confirms its commitment to the development of rural areas. I have recently discussed with the agency and with Mid Wales Development a strengthening of their rural development packages in co-operation with the Wales Tourist Board. Details of these new arrangements are being announced separately today.

Mr. Best: Does my right hon. Friend accept that his answer will be warmly welcomed throughout rural areas in Wales, particularly in Anglesey, and by those of us who press consistently for greater assistance for rural areas within the WDA's remit? What resources will be made available following the initiative?

Mr. Edwards: The initiative includes a much better presentation of the very wide range of measures already available. It includes a new grant scheme—the development of rural initiative, venture and enterprise, known as DRIVE—which is being introduced to stimulate private sector investment and to which £1 million has been allocated over the next two years. The initiative also involves the Welsh Development Agency broadening its definition of rural areas, introducing a low interest rural loans group scheme—which is to be streamlined throughout Wales—and improving the eligibility for grants to convert redundant rural buildings.

Mrs. Clwyd: Does the Secretary of State recall 10 years ago describing the Welsh Development Agency as a Frankenstein monster and an extension of Bennery in Wales? Does he now regret those words, and does he agree that the WDA has, over the past 10 years, made a significant contribution to the economy in Wales?

Mr. Edwards: If the hon. Lady had paid attention to what I have said over the past 10 years, she would know that I have frequently stated that I opposed the introduction of the agency because I was afraid that it would be used as an instrument of Bennery. I have always freely acknowledged that it was not actually used in that way by my predecessors, and I have always been pragmatic in my desire to make the most effective use of the agency. I believe that that is what we have done since the Government have been in office.

Mr. Harvey: Does my right hon. Friend accept that the initiative will be warmly welcomed throughout rural areas of Wales? Will his Department consult Clwyd Fro in my constituency, which has extensive experience relevant to the proposed initiative?

Mr. Edwards: Yes, the Department will do that, particularly as our new initiative will have a number of pilot enterprise groups which are not dissimilar to the organisation that my hon. Friend has described. We are introducing these on an experimental basis to bring in the maximum expertise, experience and advice for people who are developing business and other initiatives in the countryside.

Mr. Foot: As the right hon. Gentleman has acknowledged one conversion about the WDA, may I encourage him to make another? Over the weekend he announced a number of increases in factory allocations, three of which are in my constituency. However, we need double that number to meet even our most elementary needs. How much extra money has he received from the Budget to carry out the kind of WDA programme needed in Wales?

Mr. Edwards: I shall bear that in mind when I next make my allocations. It is, however, absolutely characteristic of the right hon. Gentleman that, whenever he gets anything, he asks me to double it. We have properly considered and assessed the needs of his borough. I have approved proposals by the WDA to construct two 10,000 sq ft and one 25,000 sq ft advance factories at Rassau, and I believe that that is the immediate need. However, the right hon. Gentleman is wrong to make demands that are not based on current need. He believes that we should double everything, on the basis that if money is thrown and scattered around, that must do good, even though it is not based on a proper assessment of need.

Mr. Wigley: Is the Secretary of State aware that £500,000 a year will not solve the major problems of deprivation in many rural areas in Wales? In view of the initiative taken by the Development Commission in England to designate rural development areas so that they will be eligible for European regional development fund grants, can he give an assurance that in Wales, too, outside the Mid Wales Development area, rural development grants will be available through the ERDF as a result of his initiative?

Mr. Edwards: The hon. Gentleman picks on one sum of money as part of a package. The scheme that we have


introduced is an additional one, as I have made clear. We have sought to bring together the wide range of schemes that exist—the large amount of money that is being spent by the development agencies, the tourist board and the ERDF—in a coherent and cohesive package. The hon. Gentleman is wrong to write down the importance of that initiative.

Mr. Raffan: Will my right hon. Friend pass on to the WDA the thanks of the borough of Delyn for the funding that the agency has provided to prepare a No. 1 site at Greenfield for new factory units? At the same time, will he ask the agency to explore all possible means to provide advance factory units at Prestatyn where the unemployment rate is now almost as high as it is in Delyn?

Mr. Edwards: I note what my hon. Friend said, and I shall see that it is considered by the WDA.

Dr. Roger Thomas: There is a general welcome for the improvement and strengthening of the WDA's hand on rural areas, but has not the Mid Wales Development got a long lead for grants for rural areas in Wales? For too long we have had first and second-class rural areas. Would it not have been better to extend the boundaries of the Mid Wales Development?

Mr. Edwards: No. We considered carefully whether to extend the boundaries and we concluded that the best way to proceed was to improve the arrangements that the WDA can make under its already extensive powers and allow Mid Wales Development to concentrate on its task in the area that was designated by the previous Government. The two agencies working together with the Wales Tourist Board can put a coherent package together.
I want to check on the position with regard to the ERDF and I shall write to the hon. Member for Caernarfon (Mr. Wigley).

Mr. Geraint Howells: May I ask the right hon. Gentleman one more question to clarify the financial position? How much extra financial aid will be given to the Development Board for Rural Wales, how much for the WDA and how much for the Wales Tourist Board?

Mr. Edwards: The announcement of the rural package does not affect the overall financial provision that has been made and is being announced in the usual way for the agencies. What is specific in the rural package is the new DRIVE scheme, for which £1 million has been allocated for a particular set of grants. As the hon. Gentleman is also aware, the total resources of the WDA do not come simply from grant, but from receipts, and they make up almost half the total. Therefore, it is the total budget that is available to the agencies that is important in considering the resources that can be devoted during a particular year.

Rate Precepts (County Councils)

Sir Anthony Meyer: asked the Secretary of State for Wales what has been the average increase in rate precepts by county councils in Wales this year.

Mr. Nicholas Edwards: 22·9p, or 13·9 per cent.

Sir Anthony Meyer: Is my right hon. Friend aware that that percentage would have been considerably higher, most notably in the county of Clwyd, had it not been for the firm way in which he handled the matter? Is he also aware that the present arbitrary and unpredictable methods

of allocating Government support by way of rate support grant make it difficult for county councils to plan ahead and that if they cannot plan ahead it becomes correspondingly difficult for them to make economies?

Mr. Edwards: Bearing that in mind, I hope my hon. Friend will warmly support the measures for improving the system of local government finance that are contained in the consultative document that we have issued. It is because of the shortcomings in the existing system, which we freely acknowledge, that we are making major recommendations for reform.

Dr. Marek: Will the Secretary of State accept that his continuing policy of draconian grant hold-back and draconian grant penalties for councils which wish to provide proper services for their citizens will lead, certainly in the case of Clywd, to the closure of many primary schools in rural areas and to the county council having to cease providing nursery education in the county? That is the shameful result of his policies.

Mr. Edwards: I noticed with interest a report in the Daily Post headed "Too top-heavy with bosses". That article described reports that had been submitted by consultants to the Clywd county council which outlined the types of economies that could be made without leading to the consequences that the hon. Gentleman described. I suspect that, whatever the truth of that newspaper report, it is true that many improvements in efficiency can be made by the county council.

Sir Raymond Gower: Is my right hon. Friend aware that these huge increases are regarded with horror and dismay by industrialists, business men and small shopkeepers? It is a terrible burden to place on people who work in difficult areas.

Mr. Edwards: I wish that my hon. Friend had made that point absolutely clear to members of his own county council, the Labour-led county council, which has increased its rates precept by more than twice the rate of inflation. That is an increase for which I can see no possible jusitification.

Mr. Roy Hughes: Bearing in mind the social distress experienced throughout Wales at present—so much directly due to the policies of the Government—does the Secretary of State not realise that this is hardly the time to put our local authorities in a straitjacket? Why does he not accept that they have many additional problems and commitments, which they are trying to handle in a most responsible fashion?

Mr. Edwards: The hon. Gentleman knows perfectly well that this is a generous settlement for Wales, which allows for increases at least at the level of inflation. The people who are in the straitjackets are the unfortunate ratepayers, who are faced with demands which they cannot meet except by getting rid of employees or by increasing charges to their customers. That is the policy being advocated by the Labour Front Bench, and I hope that it is widely noted.

Alcohol Abuse

Mr. Grist: asked the Secretary of State for Wales what proposals his Department has for lessening alcohol abuse in Wales; and if he will make a statement.

Mr. Mark Robinson: The Government's policy on measures to tackle alcohol abuse is outlined in the discussion document "Drinking Sensibly". The efforts of health educators, hostels and support groups such as local councils on alcoholism have been aided by the Welsh Office for several years. Recent developments include the establishment of Alcohol Concern Wales and the publication by the Health Education Advisory Committee for Wales of a report "Dealing with Alcohol Problems in Wales". I expect to receive the committee's final strategy shortly and I shall then consider what further action needs to be taken.

Mr. Grist: Does my hon. Friend agree that although, quite rightly, a great deal of attention has been directed to drug abuse and the growing threat that it poses, nevertheless the toll that alcohol takes in terms of broken families, misery, violence, murder and general social disorder is quite disgraceful and is often overlooked?

Mr. Robinson: We have had a programme to tackle alcohol misuse over a number of years. The problems of drug misuse are very different, in the sense that we have to take action to prevent the stuff from coming into the country and to prevent the situation from getting worse. That, of course, is expensive.

Housing Defects Act

Mr. Ron Davies: asked the Secretary of State for Wales if he intends to announce an uprating of the grant limits set under the Housing Defects Act.

Mr. Mark Robinson: It is clear that for some types of PRC houses the present eligible limit is adequate. There are categories where experience may prove this is not the case, and the limit will be kept under review.

Mr. Ron Davies: I do not think the Minister needs any more experience because about two years ago his colleague, the hon. Member for Conway (Mr. Roberts) wrote to me stating that he was fully aware of the problem and that the Welsh Office was keeping the matter under review. I put to him the specific problem of Woolaway homes. The excuse used so far by the Welsh Office is that there is no PRC licence scheme available. Will the Minister confirm that there is a PRC licence scheme now available and there is no reason other than the obduracy of the Welsh Office why the grant limit should not be increased? The attitude of the Welsh Office seems to be that it will monitor schemes and review the limit in an upward direction if it proves necessary. That is no good at all. Unless the limit is raised there is no prospect of any work being carried out.

Mr. Robinson: Reinstatement schemes have been introduced during the past two years. I can confirm that a scheme for Woolaway homes was approved on 3 March. As I have said, we continue to keep the expense limit under review in the light of experience. If the hon. Gentleman has evidence of such experience regarding Woolaway homes, I should be grateful if he would send it to me.

General Certificate of Education

Mr. Wigley: asked the Secretary of State for Wales whether his Department has had any discussions with the Welsh Joint Education Committee about the level of funding necessary to enable it to provide course materials

for the new general certificate of secondary education for those children taking such examinations through the medium of the Welsh language in June 1988; and if he will make a statement.

Mr. Wyn Roberts: The responsibility for co-ordinating the introduction of GCSE rests with the Secondary Examination Council, acting in conjuction with the Welsh Joint Education Committee in Wales, and there has therefore been no discussion between my Department and the WJEC on that subject.
The resourcing of individual schools, including the provision of course materials in Welsh, is a matter for local education authorities. However, following the Government's announcement on 13 March, an additional £1·18 million is being made available to Welsh local education authorities in 1986–87 and 1987–88 specifically for the provision of books and equipment for the GCSE.
A further £15,000—additional to the £45,000 already provided—is being made available in Wales for teacher training for the new examination, and we are actively considering another WJEC written request for £150,000 for further teacher training in 1986–87 and 1987–88.

Mr. Wigley: Is the Minister aware that, although the examination is generally welcomed, there is a real worry that teachers will not be trained in time to start the course in September this year? Gwynedd alone needs about £660,000 to launch the course. The money that has been made available is simply not adequate for the purpose. Will the Minister undertake to reconsider? Would it not be better to start the examination a year later than to make it a political football this year?

Mr. Roberts: The money that has been made available for training is precisely what the WJEC requested of us. Training is very much up to the teachers. In Gwynedd, they have not been assisted at all by head teachers preventing them from attending training courses. There will be further opportunities for them, however, including the two days before the end of the summer term.

Oral Answers to Questions — CHURCH COMMISSIONERS

Sunday Trading

Mr. Peter Bruinvels: asked the Member for Wokingham, as representing the Church Commissioners, if the commissioners will make it their policy that all new leases granted by them for commercial premises prohibit their use for trading on Sundays.

Sir William van Straubenezee The Second Church Estates Commissioner, Representing Church Commissioners: The Commissioners' standard form of lease provides that their shops should open
during the normal business hours of the locality".
Should the current law be amended, the commissioners will consider the position.

Mr. Bruinvels: Does my hon. Friend agree that there is a distinct, although sad, possibility that Sunday trading will be upon us? Is it not incumbent on the Church Commissioners to give a lead to the rest of the country by inserting in the leases of new businesses a provision which prevents them from trading on Sundays? I appreciate that the Church Commissioners already hold £26 million-worth of shares in companies that are likely to trade on Sundays, but does my hon. Friend agree that the best way forward is to set such a


requirement to ensure that the Church Commissioners are whiter than the rest of the country and that new estates which are to open in Ipswich, Kingston, Birkenhead and Stockport do not trade on Sundays?

Sir William van Straubenzee: With respect to my hon. Friend, Sunday trading is with us, and has been for some time. That is not the issue. The issue is whether, in tidying up a wholly unsatisfactory law, the House should go as far as complete abolition. That matter goes wider than this question. As I have said, the Church Commissioners will consider the matter if and when the law is changed.

Mr. Simon Hughes: Since we last had questions on this subject, have the Church Commissioners also received representations from the public about Sunday opening? If so, what steps have they taken, or do they plan to take, or to make it clear on behalf of the interests that they represent that there is increasingly widespread anxiety at the Government's continuing intention not to change their original plans but to ensure that there is a complete derestriction of Sunday trading?

Sir William van Straubenzee: I am not aware, although I shall inquire, of any additional specific representations. If I am wrong on that, I shall inform the hon. Member. He is totally accurate in saying that the overwhelming view of the Church of England as a whole, to which the Church Commissioners have responded—it is for them that I answer—is hostile to the idea of the total abolition of trading restrictions.

Mr. Aitken: Is my hon. Friend aware that until recently the cathedral shop in the precincts of Canterbury cathedral was vigorously trading on Sundays by selling beer mats and other tourist knick-knacks? Would it not be wiser for the Church Commissioners to correct the beam on ecclesiastical premises before they try to correct the mote in commercial premises?

Sir William van Straubenzee: That is precisely why they did so. It came as a surprise to one or two senior dignitaries to discover that this practice was going on. I imagine that my hon. Friend discovered it because one of the books on sale is very useful in the purchase of beer.

Mr. Ryman: Does the hon. Gentleman appreciate that this is a far wider issue, and that if the Shops Bill were introduced and passed into law—

Mr. Speaker: Order. It cannot be wider than the new leases referred to in the question.

Mr. Ryman: I am grateful to you, Mr. Speaker. The principle arises from the specific question. The Auld report recognised the anomalies in the law, but would it not be monstrous if the Government used their majority to force the Shops Bill through the House in the face of widespread opposition from the trade unions, acting to protect their members, and the Christian community throughout the country, when it would wholly alter the character of a Sunday? Does the hon. Gentleman agree—

Mr. Speaker: Order. I gave the hon. Gentleman a good steer on that.

Mr. Ryman: I shall throw some leases in.

Sir William van Straubenzee: I am answering only about new leases as and when the law is changed. If it is

changed, the matter will have to be reconsidered. Meanwhile, the views of the Church are well known, and, needless to say, I share them and associate myself with them.

Mr. Cormack: Before granting new leases, will my hon. Friend and his colleagues wait until the House has had time to deliberate? Does he agree that we do not want a high street Sunday, and therefore if the law as at present proposed is passed no new leases should be given to shops in high streets to trade on Sundays?

Sir William van Straubenzee: I shall gladly consider that, in the light of my hon. Friend's penetrating comments.

Clergy Stipends

Mr. Greenway: asked the hon. Member for Wokingham, as representing the Church Commissioners, what account the Church Commissioners take, in calculating stipends, of congregational Easter offerings to the clergy; and if he will make a statement.

Sir William van Straubenzee: The level of individual clergy stipends is a diocesan matter. However, I can say that dioceses do take into account any Easter offerings paid direct to the clergyman when they assess the amount of augmentation grant to be paid.

Mr. Greenway: Is it not a fact that, throughout the land on Easter Sunday next, in accordance with ancient tradition, church people of all ages, including schoolchildren, will be invited to make personal contributions to their incumbents? Will they not be distressed when they discover that those contributions do not go direct to the vicars, but are part of the stipends? Will the Church Commissioners, with their £1·7 billion assets, look again at this to see whether they can ensure that Easter offerings intended for vicars are paid to vicars?

Sir William van Straubenzee: In operating this policy the Church commissioners are responding to a strategy laid down in 1975 by the General Synod, which was designed essentially to have a greater element of fairness as between one incumbent and another. The laity of the Church have now overtaken the church Commissioners in providing their share of the stipends, while the Church Commissioners are wholly responsible for the money that is paid by way of pensions.

Women

Mr. Dubs: asked the hon. Member for Wokingham, as representing the Church Commissioners, how many of those for whose pay the Church Commissioners are responsible are women; and if he will break down these figures by category of employment.

Sir William van Straubenzee: There are 137 women on the commissioners' staff. The commissioners also contribute to the pay of 536 full and part-time deaconesses and female lay-workers and 100 women employed on the staffs of the archbishops and diocesan bishops. I have arranged to publish the full details in the Official Report.

Mr. Dubs: Does the hon. Gentleman realise that many women wish to take holy orders, but are debarred from doing so, and look with gratitude to the General Synod's


recent decision that women should be allowed to become deacons? Will the hon. Gentleman do all that he can to expedite that matter?

Sir William van Straubenzee: If I am entrusted with this issue, I shall do all that I can to place any necessary legislation before the House. The first measure will involve women as deacons, which is theologically quite distinct from women as priests. However, I have a feeling that the second measure will not fall to me during this Parliament.

Mr. Frank Field: As most of the money raised in parishes is raised by women, what weight should the House give to the view that there should be no taxation without representation when it comes to consider the measure concerning women deacons?

Sir William van Straubenzee: In accordance with tradition, I am sure that hon. Members will want to listen to representations from every side when that measure comes before the House. I am convinced of the arguments, but it is for the House to decide.

Following are the details:

28 February 1986


Women on the Church Commissioners' Staff


Administrative
71


Professional
5


Technical
61



*137


Women in the Parochial and Diocesan Ministry (Towards whose pay the Commissioners contribute)


Deaconesses (Full-time)
310


Deaconesses (Part-time)
55


Lay-workers (Full-time)
139


Lay-workers (Part-time)
32



536


Women on the Staff of the Archbishops and Diocesan Bishops (Towards whose pay the Commissioners contribute)


Secretaries
94


Others
6



100


* 39 per cent. of the total.

"Faith in the City"

Mr. Chapman: asked the hon. Member for Wokingham, as representing the Church Commissioners, what initiatives the Church Commissioners are taking to implement those recommendations in the report entitled "Faith in the City" which cover matters within the commissioners' responsibility.

Sir William van Straubenzee: The commissioners have offered to provide the secretariat for the proposed Church urban fund and they will give sympathetic consideration to the proposal that they should contribute £1 million per annum towards the fund. This, however, would require legislation.

Mr. Chapman: I am grateful to my hon. Friend for that information. In hindsight, and in view of what was written in "Faith in the City", is it not a pity that so many churches in the urban priority areas were demolished, as they were

very much the focal points of their communities? Does the Church have any plans to have a physical presence once more in those areas?

Sir William van Straubenzee: I must question the assumption that my hon. Friend has made. To my certain knowledge every case of proposed demolition, whether in an urban area or elsewhere, is given most serious consideration from all points of view, including that of pastoral care. If my hon. Friend does not feel that that has happened in a specific case, I should be happy to look at the matter. However, in general, great care is taken.

Oral Answers to Questions — THE ARTS

Local Government Reform

Mr. Tony Banks: asked the Minister for the Arts if he intends to monitor the impact on the funding of the arts of the abolition of the Greater London council; and if he will make a statement.

The Minister for the Arts (Mr. Richard Luce): I shall, of course, continue to take a close interest in the progress of the arts in the abolition areas, and I have confidence in their future.

Mr. Banks: Is the Minister aware that in the GLC's so-called spending spree, £4·6 million is earmarked for the arts in London? Indeed, this issue is the subject of a case at present being dealt with in the other place. Is the Minister prepared to use his good offices, as a member of the Tory party, to persuade Westminster to drop its pernicious action against the GLC? If he is not prepared to do so and the case goes against the GLC, will he put pressure on the London Residuary Body to ensure that that money goes to the Richmond scheme so that the arts in London benefit?

Mrs. Kellet-Bowman: Speech.

Mr. Banks: It was a better speech than the hon. Lady will ever make.

Mr. Luce: I note that the Court of Appeal has upheld Westminster city council's challenge as to the legality of the GLC's spending plans. I understand that the GLC has sought leave to appeal, and I cannot therefore comment on the court's decision. However, I must make the Government's position in general quite clear. We do not consider it appropriate that the GLC or the metropolitan county councils should, at this late stage, incur significant expenditure on new initiatives without the approval of the successor authorities. That is our position.

Mr. Jessel: Does my right hon. Friend agree that real art, which excites, inspires, uplifts and enriches people's lives can be greatly benefited by a budget, whereas the hon. Member for Newham, North-West (Mr. Banks) and his friends on the GLC gave a significant part of their budget for the promotion of degrading and decadent rubbish?

Mr. Luce: I agree with my hon. Friend. The hon. Member for Newham, North-West (Mr. Banks) should end his obsession with the past and look with a bit more optimism to the exciting things that can happen in future in the Greater London area. I also agree with my hon. Friend that the tax relief that is to be provided for single gifts to charities by companies will make a positive


contribution to the arts. Arts organisations should now go out and try to persuade businesses to give them their support.

Mr. Buchan: Does the Minister recognise that if it were not for the malevolent and foolish actions of both his Government and Westminster council the GLC would now be able to save some of the arts described by the hon. Member for Twickenham (Mr. Jessel)? The GLC could come to the rescue of the Victoria and Albert museum in the same way as it came to the rescue of the Cottesloe theatre. Will the Minister fill the place of the GLC? Will he give the proper funds to the Victoria and Albert to repair the damage caused by the flood?

Mr. Luce: The hon. Gentleman mentioned Westminster council. It should be strongly praised for agreeing to provide £3 million for the arts in the Greater London area. If other councils, such as Islington borough council, followed the Westminster example we would make some progress. I have a great deal of sympathy, as I am sure does the whole House, for Sir Roy Strong and his staff, who have done a magnificent job over the weekend following the tragic accident at the museum. I and my hon. Friend the Parliamentary Under-Secretary of State for the Environment, the hon. Member for Ealing, Acton (Sir G. Young) will, immediately after Question Time, go to the Victoria and Albert to see the scale of the damage and to discuss the situation with Sir Roy Strong. We are considering whether there should be an inquiry. This accident occurred because of leakage from a temporary joint on water piping. It is against that background that we are considering an inquiry.

Sir David Price: Does my right hon. Friend agree that dealing with the flooding of the Victoria and Albert on Saturday is the most urgent artistic problem in London? On his visit today he will carry with him the full support of the House and will go in the knowledge that if he wishes to ask for extra money to fund the repairs the House will view the request sympathetically.

Mr. Luce: I am grateful to my hon. Friend. As I say, in the next hour or so I will see the full extent of the damage. I take full account of what my hon. Friend has said.

Mr. Chris Smith: asked the Minister for the Arts what assessment he has made of the impact on the 1986–87 funding position of arts' organisations in Islington of the abolition of the Greater London council; and if he will make a statement.

Mr. Luce: I refer the hon. Member to my reply of 10 February about Sadler's Wells theatre, for which the prospects are now good. Discussions continue between the Arts Council and Islington borough council about the funding of other arts bodies in the borough.

Mr. Smith: Is the Minister aware that among the many valued theatrical institutions in the borough of Islington is the Almeida theatre? Is he also aware that many theatregoers, not just from Islington but from the whole of London, are greatly worried about the threat to that theatre? Will he make sure that the Arts Council looks favourably at future funding of the Almeida theatre, and will he also make representations to his right hon. Friend the Secretary of State to ensure that before insisting that Islington council picks up the bill, it is not ratecapped?

Mr. Luce: Like other borough councils, Islington has been relieved of the rate precept and the bill that it had to pay for the arts from the GLC. That will apply in the coming year. I agree with the hon. Gentleman that the Almeida theatre is extremely good and has a high reputation. For that reason, it is not unreasonable to look to Islington borough council to play its part. On 2 April the Arts Council will announce its budgets for all those areas where borough councils have agreed to co-operate. The Islington council has not agreed to co-operate, but I hope that it will reconsider its position.

Mr. Alan Howarth: Does my right hon. Friend agree that, since the Budget, the debate on funding for the arts has to be conducted in new terms, and that arts organisations which have been accustomed to look to central and local government for funding should look also for tax-favoured charitable donations? We on the Tory Benches offer our warmest congratulations to the Minister and to the Government on a creative initiative which will release significant additional sums for the arts.

Mr. Luce: I strongly acknowledge the role that my hon. Friend has played and the strong views that he has expressed in previous months. I am convinced that the Budget measures will transform the arts climate and encourage still further the amount of giving, not only to charitable bodies, but to the arts world. I hope that all hon. Members will do their utmost to persuade businesses and, later, individuals to give to the arts.

Mr. Buchan: Does the right hon. Gentleman realise that, not only in Islington, but in the surrounding boroughs of London and in the metropolitan counties, it is a sick joke to suggest that they have the moneys to replace the missing funding? There are at least half a dozen extremely important and major artistic events in Islington, including theatres. Does the right hon. Gentleman recall that his predecessor gave a pledge that the arts would not suffer and that the money would be replaced? Quite apart from what the right hon. Gentleman expects of the boroughs, will he fulfil that pledge?

Mr. Luce: We have clear evidence, not only in Greater London, but outside London, that all these issues are being tackled sensitively and properly one by one. There are already agreements on these matters in Greater Manchester, Tyne and Wear and other areas. Only a few district council successor authorities are holding back the prospects of a sensible settlement. Islington borough council still has not made a clear decision. Other borough councils, including Hammersmith and Westminster, have agreed, and their lead should be followed.

Wales

Mr. Wigley: asked the Minister for the Arts when he next plans to meet the chairman of the Welsh Arts Council to discuss the funding of the arts in Wales.

Mr. Luce: Mr. Mathew Pritchard has recently been appointed to be chairman of the Welsh Arts Council, and I hope to meet him as soon as a date can be arranged.

Mr. Wigley: When the right hon. Gentleman meets Mr. Prichard, will he take up with him the position of the Welsh National Opera, which said last week that it could be £500,000 in debt by this time next year because the funding was not sufficient to cover inflation? Will the right


hon. Gentleman look at the recent reports of the Arts Council of Great Britain on the allocation of resources to opera to ascertain whether any of those resources could be directed towards the Welsh National Opera to alleviate the position?

Mr. Luce: I am in no doubt that when I meet Mr. Prichard we shall discuss these and other matters. I should point out that the budget for the Welsh Arts Council for the coming financial year is being increased by 6·6 per cent. That is a positive contribution. I have already visited the Welsh Arts Council in Wales. It is doing an excellent job. Of course, I shall discuss the issue of the Welsh National Opera, which has a strong national as well as international reputation.

Mr. Best: Will my right hon. Friend discuss with Mr. Prichard the funding of Opera Gogledd Cymru, which is a new venture to enable young people to train for a future operatic career, which will give the people of north Wales an opportunity to see superb opera?

Mr. Luce: As my hon. Friend has raised this matter with me, I shall, of course, mention it in my discussions. I must point out, however, that it is for the Welsh Arts Council to decide how to disburse the money. The important point is that I have increased the amount by 6·6 per cent. for the coming financial year.

Evelyn Glenholmes

The Secretary of State for the Home Department (Mr. Douglas Hurd): With permission, Mr. Speaker, I should like to make a statement about the recent regrettable failure to secure the extradition of Evelyn Glenholmes from the Republic of Ireland.
Nine endorsed warrants for the return of Miss Glenholmes were first issued on 31 October 1984 and submitted to the Irish authorities for endorsement in accordance with the United Kingdom-Irish extradition legislation. The offences covered by the warrants related to various terrorist offences committed between 1981 and 1982, including murder, attempted murder, firearms and explosives offences. The original warrants were returned by the Irish authorities, who asked for some technical changes to be made to their wording. Fresh warrants were accordingly submitted on 6 November 1984, but by that time details of the extradition request had been disclosed in the press and Miss Glenholmes disappeared from view.
Miss Glenholmes was later arrested in Dublin on 12 March 1986, and the hearing of the extradition request opened in the district court of Dublin last Wednesday on the basis of the warrants issued in November 1984.
Throughout last week's court hearing there was close co-operation between the Irish prosecuting authorities and officers from the Metropolitan police and the office of the Director of Public Prosecutions.
On Saturday morning, having heard submissions from defence counsel that the extradition warrants were defective, the court discharged Miss Glenholmes. I understand that the principal consideration which underlay the court's decision was that, whereas the standard wording printed on the warrants referred to information on oath as having been laid on the day the warrants were issued—which was 6 November 1984—the court considered that the relevant information was that laid when the original warrants had been issued on 31 October 1984. I understand that the magistrate in London treated the further application on 6 November as having been made under oath adopting the information already laid but not resworn. The information required for both sets of warrants was identical, but was not sworn again on 6 November, which could have avoided the difficulty which later arose.
Even before Miss Glenholmes was released, the United Kingdom authorities had made arrangements for the issue of a fresh warrant covering one of the charges of murder. On the basis of this fresh warrant, the Garda obtained a new provisional warrant for Miss Glenholmes' arrest. Once she had been rearrested, she was brought back to the district court. I understand the Miss Glenholmes was then released, this time on the grounds that the court was not satisfied, in spite of a telephone call from New Scotland Yard to the Garda, that there was evidence that a fresh warrant had been issued in London that morning or that Miss Glenholmes had in effect been at liberty between her earlier release and her rearrest.
Following Miss Glenholmes' second release, the fresh warrant was sent to Dublin this morning. Earlier today additional warrants were sent covering the eight remaining charges and will be sent to the authorities in Dublin later today.
My right hon. and learned Friend the Attorney-General and I have looked carefully at the information so far available to us. On the basis of that information, it is clear that the extradition application failed because of a technical objection taken by the Dublin court. My right hon. and learned Friend and I regret that this technical objection was not foreseen in time and fresh warrants obtained. We are considering urgently the need for a review of procedures and the handling of this sort of case. My right hon. and learned Friend the Attorney-General has instructed the Directors of Public Prosecutions for England and Wales, and for Northern Ireland, to ensure personally that all outstanding warrants in respect of terrorist offences are checked at once for accuracy and sufficiency. Under the auspices of the Intergovernmental Conference, work has already begun on a range of legal matters relating to extradition; and lessons of the past few days will be studied in that context.
For the sake of completeness, I should also inform the House that our inquiries have shown that in giving evidence to the court in Dublin an officer from the Metropolitan police made an error in referring to the dates on which the warrants were issued. I understand that he sought to correct this error but that an opportunity for him to do so was not forthcoming. This does not, however, appear to have influenced the court in its decision to release Miss Glenholmes.
It is deeply disappointing that it has not so far proved possible to obtain the extradition of Miss Glenholmes to face justice in a British court. It is essential that we all learn the right lessons for the future from this failure.

Mr. Gerald Kaufman: That statement still leaves a number of extremely important questions to be answered. Will the Home Secretary confirm that throughout this lamentable episode the Irish authorities have behaved with complete propriety and that the Irish Government have fulfilled all their obligations?
We are told that Evelyn Glenholmes is Scotland Yard's most wanted suspect for alleged terrorist offences. In the light of the fact that the extradition of Brendan Burns failed through errors relating to warrants, and the further fact that two prior sets of warrants were prepared for Evelyn Glenholmes, one of which was found in the Irish courts to be faulty, not just technically—and the Florrie Secretary does himself no credit by harping on technicalities when matters of substance are involved—but in at least one serious material respect, and the second one withdrawn by the office of the Director of Public Prosecutions when found to be faulty, why was this third and crucial error permitted? Why were these warrants permitted to go forward without being meticulously checked? Why, during the nearly 18 months that were available, were the warrants not rechecked for accuracy? The Home Secretary says that they were originally checked with the Irish authorities, were found wanting and were corrected, but the right hon. Gentleman does not point out that the new ones—the allegedly corrected ones—also turned out to be faulty. Why were they not cleared in advance for accuracy and technical probity with the Irish legal authorities?
Who was in charge of this process in the office of the Director of Public Prosecutions? Is it true, as alleged, that this matter was dealt with at a junior level? Is it true, as further alleged, that other warrants that were sent to Ireland on other matters have also been found to be


defective? The Home Secretary says that new warrants in the Evelyn Glenholmes' case have now been issued. Is he sure that they are in order this time?
Mr. Dukes, the Irish Minister of Justice, said yesterday that after the court adjourned on Friday in Dublin further information and clarification were sought from the British authorities at that stage but, Mr. Dukes said:
We were not able to get it.
What is the explanation for that serious lapse?
Why did an official from the office of the Director of Public Prosecutions then go to Dublin? What was his purpose? What did he achieve? What was the purpose of the telephone call referred to by the Home Secretary that was made to Dublin from a chief inspector of the Metropolitan police? What was that meant to achieve? Could the Home Secretary say how a British court would have responded to such a telephone call on a serious extradition case? Above all, taking into account the important and sensitive issues at stake, why did not the Director of Public Prosecutions ensure that he himself, or a high official, supervised meticulously all stages of the procedures? Why did not the Attorney-General, who is answerable to this House, take care to satisfy himself that the necessary procedures had been precisely observed?
The Home Secretary calmly tells us this afternoon that now, when the horse has bolted, there is to be a careful inspection of the stable. That is not good enough. A full inquiry is essential. It is also essential that those at the very top accept responsibility, are disciplined and, if necessary, are removed from the offices that they hold.
This disquieting episode has created serious difficulties for the Irish authorities in their determination to co-operate with this country over the delicate issue of extradition. What is more, the scenes on television have given the IRA a gratuitous propaganda triumph. Slackness, incompetence and complacency have brought about this discreditable botch up. May we have an absolute assurance that steps will now be taken to ensure that nothing like this can ever happen again?

Mr. Hurd: I confirm that we have no criticism of the co-operation that we have received in this matter from the Irish authorities. I am glad of the opportunity to make that clear.
In response to the right hon. Gentleman's second point, the difficulty on which this case foundered on Saturday was a technical difficulty. I think that my statement made that clear. It was concerned with the question whether, when a second and revised warrant was sought from the same magistrate, the identical information which was laid when obtaining the first warrant needed to be laid under oath all over again. Whatever view one takes of it, that is a technical point. As I said in my statement, I believe that a great deal of trouble could have been avoided if that had been foreseen and acted upon in the autumn of 1984.
The second set of warrants which were held to be defective on Saturday were given to the Irish authorities and no objection or criticism was raised on them. However, I think that it is fair to add that it would not have been reasonable to expect the Irish authorities to have spotted the particular point on which the court in Dublin found the warrant to be defective on Saturday. But the warrants were available to the Irish authorities for their comments.
I am advised that it is perfectly normal in these circumstances for news of the issue of a fresh warrant to be conveyed, either way, by a telephone conversation between the police forces concerned. That has happened before, and I understand that it is normal. It happened on this occasion, although it was not accepted by the court for the reasons I have given. I agree with the right hon. Gentleman that it is essential that we find ways, through the Anglo-Irish conference and in other ways, to ensure that such difficulties do not recur.

Mr. Ian Gow: Is there not a high duty resting on the Director of Public Prosecutions in all cases of extradition warrants to ensure that those warrants are validly and properly prepared? Is not that duty even greater when we are dealing with a matter of the gravest importance such as terrorism on a massive scale of which the person concerned is suspect? Is my right hon. Friend able to assure the House that the warrants taken to Dublin this morning have been seen and approved by the appropriate legal authorities in Dublin and that he has received an assurance that the new warrants sent over today are in order?

Mr. Hurd: I agree with the first part of my hon. Friend's comments. It is our responsibility to ensure that warrants of this kind are in a form which arms them against all possible difficulties and criticisms, whether of a substantial or technical kind. The new warrant and the other warrants which I mentioned being sent to Dublin today are identical to those previously sent, with the crucial exception that the information concerned has been relaid before the magistrate concerned.

Mr. J. Enoch Powell: Has it occurred to the Government that the incompetence of those acting on their behalf in the matter of extradition may have been exceeded by the incompetence of those who negotiated the Anglo-Irish agreement and who advised the Government to enter into it?

Mr. Hurd: I anticipated that the right hon. Gentleman would raise that point. However, I do not think that he has proved its relevance to the matter we are discussing.

Sir John Biggs-Davison: Since my right hon. Friend has reasonably pointed out that there is no relevance to the Anglo-Irish agreement in this unhappy matter, it is not the case that the commendable and exceptional exertions of the Garda Siochana, to which I pay tribute, have no connection with that agreement either?

Mr. Hurd: As I said in my response to the right hon. Member for Manchester, Gorton (Mr. Kaufman), we have no criticism of the behaviour of the Irish Government or of their agencies, including the Garda, in that respect. Therefore, I associate myself with what my hon. Friend has said. The relevance of the Anglo-Irish agreement is that discussions are taking place under article 8 of the agreement to review procedures. Obviously the lessons of this event will be relevant to those discussions.

Mr. Merlyn Rees: Surely the purpose of a statement in this House is to enable us to question the responsible Minister. The Home Secretary is not responsible for extradition warrants and he is not responsible for the Director of Public Prosecutions. We should be questioning the Attorney-General. The Opposition will have to take the matter further.
In any event, is the right hon. Gentleman aware that this is not the only example of a defective extradition warrant recently? It was brought to my notice by the chief constable of Yorkshire on Friday that a defective warrant was served on a man called Anthony Kelly, who is wanted for questioning for 18 armed robberies and the murder of a Leeds policeman. Will the right hon. Gentleman use his powers as Home Secretary to tell the Attorney-General that when the warrant is served again we in Yorkshire will want better results?

Mr. Hurd: The matter concerns the police and the prosecuting authorities in this country, so it seems sensible that I should make the statement today. No doubt the right hon. Gentleman will have ample opportunities for asking questions of my right hon. and learned Friend the Attorney-General if he wishes to do so. [HON. MEMBERS: "When?"] I do not doubt that there will be opportunities.
I refer to the case that the right hon. Gentleman mentioned. The gentleman concerned, Mr. Kelly, is serving a sentence of imprisonment in the Republic for offences committed in the Republic. Perhaps, therefore, we are not at the end of that story.

Mr. Ivan Lawrence: Would it not have been unthinkable for a British court not to have granted a reasonable adjournment when such a technicality arose—particularly one which emerged only in the course of cross-examination—and which must have been known to the Irish authorities and thought by them to be utterly unimportant?

Mr. Hurd: I do not want to get drawn into that. It is true that those concerned on our behalf asked for an adjournment and the court did not grant it. My hon. and learned Friend and his colleagues will be able to judge whether a British court would have taken a different decision.

Mr. Alex Carlile: In dealing with this extraordinary example of sloppy, incompetent professional negligence, will the Home Secretary tell us whether in future we are to regard the failure by a court to administer an oath as a mere technicality? Why in a case as serious as this did not the Director of Public Prosecutions personally examine the warrants before they were sent to Ireland?
Will the right hon. Gentleman tell us why the mistake was not corrected properly before Saturday morning, and whether anybody will take responsibility for this shambles in the way that he should?

Mr. Hurd: The hon. and learned Gentleman misunderstood the point that was at issue. It was a question not simply whether the information was on oath, but whether the information needed to be relaid, although it was identical to the information that had been provided on oath a week before. That is the point. I maintain that it is a technical point.
The Director of Public Prosecutions is responsible for the conduct of that office, and for the extent to which he delegates to senior advisers and officials the handling of particular cases. The organisation of that office is, of course, a matter for my right hon. and learned Friend the Attorney-General.

Mr. Michael Mates: Far from this sorry affair being used as a criticism of the Anglo-Irish agreement, does not my right hon. Friend agree that it is

a reason for those involved to try harder to make absolutely certain that the co-operation that was begun three months ago becomes more effective so that this sort of incident will not be repeated? Will he specifically ensure that those responsible get together in a working party specifically to make sure that this sort of misunderstanding will never happen again?

Mr. Hurd: I entirely agree with my hon. Friend. That is exactly what is happening. Of course, as right hon. and hon. Members on both sides of the House know, this process has always been a subject of extraordinary difficulty and complication, and the failure in this case is simply a further illustation of that fact. I do not complain about the criticisms that have been made this afternoon, but that is an argument not for despairing of that process but for continuing strenuously with it.

Mr. A. E. P. Duffy: (Sheffield, Attercliffe): The Home Secretary persists in trying to minimise the incompetence of those responsible by putting forward legal objections when he is really dealing with due process. Is he not aware that this is the fourth major embarrassment in extradition cases with the Irish Government in the past two years because of blunders and inadequate presentation of cases by the British and Northern Ireland authorities? Why has it suddenly become so difficult in London to prepare an adequate legal presentation?

Mr. Hurd: As I said in my last answer, this is an area which has proved to be difficult over the years. This is the latest example of it. I maintain—I think that my statement bears it out—that the difficulty on which this case fell was essentially a technical one and not one of principle.

Sir Eldon Griffiths: Is there not a very painful contrast between the detailed, careful, and often dangerous work by the police service of the Irish Republic, of the Metropolitan police and of the RUC in obtaining the necessary information, sometimes at the risk of their lives, and the comparatively slipshod and careless way in which the matter was dealt with in the Director of Public Prosecution's office? Who precisely was responsible in the DPP's office for establishing the sufficiency and accuracy of the warrants? What hope does my right hon. Friend hold out of bringing this most wanted person to justice in the near future?

Mr. Hurd: It would be neither customary nor in order to give the names of officials. The structure of responsibility is clear. It is through the Director of Public Prosecutions to my right hon. and learned Friend the Attorney-General.

Mr. George Foulkes: Since this statement is principally about the DPP's office, since on a number of occasions the Home Secretary has said that this is a matter for his right hon. and learned Friend and since he has sometimes said "I am advised" after the Attorney-General has whispered the answer in his ear, why is the Home Secretary making the statement and not the Attorney-General?

Mr. Hurd: If the hon. Gentleman had been listening to my reply to the right hon. Member for Morley and Leeds, South (Mr. Rees) he would have realised—[HON MEMBERS: "Answer."] I did answer the question. I explained that the matter which is the subject of the


statement covers part of the area of my responsibility—that is, the police and the general conduct of policy against terrorism—and partly a matter which falls within my right hon. and learned Friend's responsibility, that is, the DPP's office. Since we could not both make the statement, one of us had to, and the lot fell to me.

Mr. John Wheeler: Although my right hon. Friend and his Department are not directly responsible, does my right hon. Friend agree that the degree of incompetence involved is such that there must be the most searching inquiry into the way that these issues are handled to ensure that a proper administrative machine is put into place so that this does not happen again?

Mr. Hurd: I agree.

Mr. Robert Maclennan: Is not the essence of the matter that the Home Secretary has attempted to suggest to the House that this is a matter of extraordinary complexity and that he has tried to weave a web to protect those responsible? Is not the reality that which is set out in the Government's Green Paper on extradition last February which described extradition by warrant as a "comparatively simple and expeditious procedure"? In the light of the evidence of the Director of Public Prosecutions' inability to manage such a comparatively simple and expeditious procedure, should he not resign, or, if not he, the Attorney-General?

Mr. Hurd: I do not think that that is fair of the hon. Gentleman. The advantage of the procedure which we follow with the Republic is that it avoids some of the difficulties involved in our other extradition legislation, in particular the prima facie case which the House might be asked to consider next Session. It should be a comparatively straightforward procedure, but that assumes that everybody on both sides is armed effectively against the procedural difficulties, whether of substance or technical. That did not happen in this case.

Mr. Ivor Stanbrook: May I ask my right hon. Friend not to accept too readily that there has been any incompetence on the part of the DPP or his staff? If true reciprocity existed, as it should, the document would not necessarily have been ruled defective. Given the nature of the technical objection, would it not have been sufficient in this country for the court to adjourn the case for consideration before making an announcement on the application and thus releasing into the community a notorious wanted criminal? In these circumstances, should we not address our criticism to the spirit with which the Dublin court operated this business?

Mr. Hurd: I hope that the House has noted carefully the point which my hon. Friend has made with his experience of these matters. Choosing my words with care, and as I have already said in answer to an earlier question, I think that it would have been possible for the court to take a different decision on the request for an adjournment.

Mr. Michael Foot: As the House is clearly quite dissatisfied with the answers given by the Home Secretary, will the right hon. Gentleman make representations to the Leader of the House that a statement should be made to the House tomorrow by the Attorney-General?

Mr. Hurd: My right hon. Friend the Leader of the House will have noted that request. As I have said, there are ample opportunities to put questions to my right hon. and learned Friend the Attorney-General on aspects of the matter which concern him especially. There are wider aspects, however, and several of the questions which have been addressed to me have covered them. I repeat that I think that it was entirely right that I should make the statement.

Mr. William Cash: Does my right hon. Friend deplore the irresponsible attempts of a vociferous minority to use this regrettable incident as a means of denigrating the Anglo-Irish agreement?

Mr. Hurd: Yes, Sir.

Mr. John Ryman: Normally the standard of professional work of the Director of Public Prosecutions is extremely high, so why was it that the revised warrant of 6 November 1984 was not sworn? What was the reason for not taking the step of swearing that warrant? It contained revised facts and was amended to an extent that made it obvious that it had to be sworn again to conform with the law.

Mr. Hurd: The magistrate did not so require.

Sir Anthony Grant: Instead of merely showing the second lot of warrants to the Dublin legal authorities, would it not have been more sensible specifically to have asked the authorities whether the documents were in order? After all, the Dublin authorities should know more about Irish law than we do. Does my right hon. Friend agree that they should have been just as keen as the British authorities to bring criminals to justice? Also, has my right hon. Friend noted the apparent glee with which some Opposition Members have greeted the escape of a notorious criminal? Whose side are they on?

Mr. Hurd: The revised warrants were available to and shown to the Irish authorities, and they raised no comment or objection to them on the ground of Irish law. As I have already said to the right hon. Member for Manchester, Gorton, (Mr. Kaufman), it would not have been fair or reasonable to expect the Irish authorities to spot the technical defect—

Mr. Stanbrook: Why not?

Mr. Hurd: This involved the relaying of information between one week and another in this country. It would not be fair to expect the Irish authorities to spot the alleged defect, which was thought to be decisive by the court.

Mr. Andrew Faulds: Since Scotland Yard is blameless in this matter, although the Home Secretary made an adverse comment on a Metropolitan officer, why has he been put up to protect the Attorney-General, whose responsibility the Director of Public Prosecutions comes under, and who should be making the statement and who should now proceed in any case, after this series of errors, to dismiss Sir Thomas Hetherington?

Mr. Hurd: I have answered that question twice. The hon. Gentleman will excuse me for not attempting to do so a third time.

Mr. Richard Ottaway: Will my right hon. Friend explain why the Irish courts were not satisfied that a new warrant was issued for the second hearing on Saturday afternoon?

Mr. Hurd: I sought to explain that. There were two reasons, and I do not wish to comment on them particularly. One reason, as has been mentioned already, was whether it is sufficient evidence of a new warrant having been provided that the news of that warrant is communicated by telephone between police forces. I gather that that is normal practice, but it was not accepted by the court.
The second question was directed to Irish law, on which I am not competent. The issue raised was whether the release of Miss Glenholmes on that morning was, in effect, a release to liberty under Irish law.

Mr. A. J. Beith: Are there to be any resignations or any disciplinary action at any level in the department concerned, or does nobody take any responsibility for anything any more?

Mr. Hurd: I do not think that the hon. Gentleman could have listened to what I said in my statement on that issue. Both my right hon. and learned Friend the Attorney-General and I regretted the failure in this case, and that was stated specifically in my original statement. The internal arrangements of the office of the Director are a matter for my right hon. and learned Friend.

Viscount Cranborne: Can my right hon. Friend tell the House what sanctions are available to Ministers when they are convinced of the incompetence of public servants?

Mr. Hurd: They vary, but they exist.

Mr. Kaufman: The House is clearly highly dissatisfied with the Home Secretary's faltering attempts to answer the basic points that have been raised. The right hon. Gentleman harps on the alleged technicality of the failure on Saturday, but the magistrate who signed the warrant signed it "Sworn this day" when it was not sworn that day. Was that statement, which was palpably untrue, merely a technicality? Above all, the right hon. Gentleman has not told the House who was responsible. Who was he seeking to shield by himself making this statement? Was it the

Director of Public Prosecutions? Was it the silent Attorney-General? Or, in accordance with the Government's style, will no one accept responsibility for this almighty mess?

Mr. Hurd: The right hon. Gentleman is repetitive. As I said in my statement, my right hon. and learned Friend and I have expressed our regret that this occurred. Therefore, we accept our share of the responsibility; and that, I think, is what the right hon. Gentleman would expect.
The point at issue was whether identical information which had been laid under oath on one day was required to be laid under oath on a second day before the same magistrate. The magistrate did not so require and it was not done. It is clear that if it had been done this particular difficulty would have been avoided, although everyone who has studied the case knows that even then there were further difficulties further down the road.

Mr. Anthony Nelson: Is my right hon. Friend aware that, despite the opportunist and derogatory response of the Opposition, he and my right hon. and learned Friend the Attorney-General continue to enjoy the confidence of the House and the country for the way in which they discharge their responsibilities to hound terrorists and to bring them to book?

Mr. Hurd: I do not think that my right hon. and learned Friend and I expected that a statement on this subject would be received with enthusiasm, and I do not wish to understate the importance of this failure. I have tried to be open with the House about exactly what happened. I am grateful to my hon. Friend for what he has said.

Mr. John Morris: On a point of order, Mr. Speaker. In view of the disquiet on both sides of the House about the role of the Director of Public Prosecutions and his office, may we expect a statement tomorrow from the Attorney-General, the Minister responsible, on the reorganisation that he has effected of the director's office for the avoidance of further difficulties, technical or otherwise?

Mr. Speaker: That patently is not a matter for me.

Auxiliary Oil Replenishment Vessel (Order)

Mr. Nicholas Brown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the Royal Navy's order for the auxiliary oil replenishment lead vessel.
The matter is urgent because an announcement is about to be made placing the order at Harland and Wolff in spite of the representations made at the weekend by Swan Hunter to the Ministry of Defence and in spite of the representations made by myself and by my hon. Friend the Member for Wallsend (Mr. Garrett) when we met the Prime Minister last Thursday.
The decision should be delayed before such a disastrous course is embarked upon to allow Parliament the opportunity to consider the strategic issues involved. Is it Parliament's wish that privately owned warship yards—such as Swan Hunter—should compete against the massive public subsidies—£37 million last year—which have been given to Harland and Wolff? As there is enough work for both yards, why will the Government not place the order for the lead vessel at Swan Hunter and the order for the follow-on vessel at Harland and Wolff? Harland's has work until 1987 but Swan Hunter's has a shortfall. Why should the people of Tyneside have to accept a further 2,000 redundancies, which would give that area the highest level of unemployment in the country, including Northern Ireland, as the price for the Anglo-Irish agreement?

Mr. Speaker: The hon. Member for Newcastle upon Tyne, East (Mr. Brown) asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
the Royal Navy's order for the AOR lead vessel.
I have listened with great concern to what the hon. Member has said, but I must say that I do not consider the matter that he has raised is appropriate for discussion under Standing Order No. 10. I cannot therefore submit his application to the House, but I hope that he will find other ways of raising the matter.

Evelyn Glenholmes

Mr. Ian Gow: I beg to ask leave to move the Adjournment of the House, under Standing Order No 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the failure of the Director of Public Prosecutions to secure the extradition from the Republic of Ireland of Evelyn Glenholmes, suspected of the gravest terrorist offences, despite the Anglo-Irish agreement of 15 November 1985.
This matter is clearly specific and relates to events which are within the knowledge of the House, which took place as recently as last Saturday. It is undoubtedly important. You have heard, Mr. Speaker, the deep concern expressed by hon. Members on both sides of the House about the statement made by right hon. Friend the Secretary of State for the Home Department.
The matter is also urgent. You will have noticed, Mr. Speaker, that my right hon. Friend the Home Secretary did not answer the third question that I put to him this afternoon, and say whether he had satisfied himself that, in the view of the Irish legal authorities, the third warrant sent over this morning to Dublin did conform, and conform in every respect, with the legal requirements of Irish law so that there could be, if Miss Glenholmes should be apprehended, a proper extradition of the kind that was attempted twice on Saturday.
There is a third aspect which I would like to draw to your attention, Mr. Speaker. Our proceedings this afternoon take place four months after the signing of the Anglo-Irish agreement. On 11 March, less than a fortnight ago, there was a meeting of the Intergovernmental Conference at ministerial level. I wish to remind you, Mr. Speaker, of what took place as recorded in the official communiqué:
The Conference welcomed the development of contacts between officials concerned with security questions, and the plans for these contacts to continue.
Later in that communiqué it states:
The conference heard a report of the meeting held on 13 February to discuss legal matters including the administration of justice.
The communiqué also stressed that:
The Conference agreed that at its next meeting it would consider … progress reports from the groups of officials set up under Article 8 of the Agreement to discuss extradition.
It is clear that the matters which were the subject of the terrible events in Dublin on Saturday, and which were the subject of my right hon. Friend's statement this afternoon, were also considered at the last meeting of the Intergovernmental Conference.
The House is about to rise for the Easter recess. There is no other opportunity, save through an emergency debate, for us to discuss these matters which are so clearly of importance to the House. I ask you, Mr. Speaker, to agree to an emergency debate.

Mr. Speaker: The hon. Member for Eastbourne (Mr. Gow) asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
The extradition from the Republic of Ireland of Evelyn Glenholmes, suspected of the gravest terrorist offences, despite the Anglo-Irish agreement of 15 November 1985.
I have listened, as has the whole House, to what the hon. Gentleman has said and I listened, of course, to the


earlier exchanges on the statement. I regret that I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House.

Courtaulds Clothing Ltd., Seaforth

Mr. Allan Roberts: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
The threatened closure of the factory, Courtaulds Clothing Ltd. at Seaforth in my constituency.
This is a specific matter because on Friday the whole work force of 220 people was called into the canteen and given 90 days' notice of the closure of the factory. Of that work force, 58 per cent. are women and the sole breadwinners in their homes and 57 per cent. are under 21 years of age and in their first real job.
It is urgent because the House, by debating the issue, can prevent the closure of this viable factory which makes clothes for such companies as Mothercare and Marks and Spencer. It is urgent because the factory has a full order book and is being closed only for reasons of internal politics at Courtaulds. An urgent debate is needed because the work force has issued a statement saying that it will consider any method of non-violent, direct action to secure the future of their jobs and prosperity.
The House must ensure that the company opens the books to the work force and that, if Courtaulds does not want to continue to operate that factory, a workers' cooperative is able to do so in co-operation with the companies for which the factory now produces goods. The issue is especially urgent because it is happening on Merseyside, where unemployment is at its highest ever and already running at 30 per cent. in Bootle and Seaforth. If the redundancy notices stand, the highly flexible, skilled work force is likely to be on the dole for some considerable time.

Mr. Speaker: The hon. Member for Bootle (Mr. Roberts) asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
The proposed closure of the Courtaulds factory at Seaforth in the constituency of Bootle.
I regret that I must give the hon. Member the same answer that I gave to the other hon. Members making Standing Order No. 10 applications. I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and I cannot therefore submit his application to the House, but I hope that he will find other methods of raising the matter, which is of concern to his constituents.

Prime Minister (Share Dealings)

Mr. Dennis Skinner: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
Prime ministerial conflict of interests in relation to share dealings.
The matter is specific, Mr. Speaker, because it refers to the head of the Government in the United Kingdom dealing in shares from 10 Downing street and using that building as an arm of the stock exchange.
It is also specific because it has always been generally understood in the House that, like councillors and others who represent the public in matters of accountability, Government Ministers, including the Prime Minister, do not become involved in dealing in shares because they are privy to inside information that the ordinary public does not have. In these days of privatisation, there have been countless instances when the Government and the Prime Minister have been and were privy to such information and could have made millions.
The matter is important because there is a conflict of interests. It is not right and proper that in these days of massive speculation on the stock exchange, when the Financial Times index has gone through the 1,400 barrier, we should dismiss lightly the fact that a Prime Minister has been dealing in shares.
The matter is important because No. 10 Downing street does not belong to the Prime Minister but to the nation, and it is used for Cabinet meetings every week. It is also used for Budgets, and announcements are made by the Prime Minister and many other Ministers with advance information that could lead to a lot of money being made

by a lot of people. That is why it has been generally agreed over the years that Ministers and Prime Ministers do not become involved in speculation. The matter is also important because it is set against a backcloth of City fraud that has been unsurpassed in these many years. I do not have to go further down that road.
The matter is also important because of the public disquiet about it and because many people—I am among them—believe that there should be a full and independent public inquiry into the whole matter so that the people can judge for themselves.
The matter is urgent because it has occurred since the House last met on Friday and because the Prime Minister has refused to come to the House today, as she should have done, to make a Prime Ministerial statement to explain the matter. It is also urgent because the Committee considering the Financial Services Bill is meeting upstairs and one of its jobs is to clear up the question of conflict of interests as it applies to people in the City of London and Ministers.
The matter is important, urgent and specific. We might have gone to the Director of Public Prosecutions but we have no faith in him.

Mr. Speaker: The hon. Member for Bolsover (Mr. Skinner) asks leave to move the Adjournment of the House for the purpose of discussing an important and specific matter that he thinks should have urgent consideration, namely,
Prime ministerial conflict of interests relating to share dealings.
I have listened with care to what the hon. Gentleman has said, but I regret that I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10 and, therefore. I cannot submit his application to the House.

Mr. Skinner: It will not go away.

Parliamentary Language

Mr. Richard Hickmet: On a point of order, Mr. Speaker. On Thursday, during exchanges between the hon. Member for Islington, North (Mr. Corbyn) and my hon. and learned Friend the Minister of State, Home Office, the hon. Member for Islington, North suggested that some hon. Members might be persuaded not to take up immigration cases because they were racist. Such language is unparliamentary, and I would invite you, Mr. Speaker, to ask the hon. Gentleman to withdraw that allegation. I raised the matter with you on Thursday and you informed me that you had not heard that remark. I must inform you that Hansard did, and it appears in the official record.

Mr. Speaker: I thank the hon. Gentleman for giving me notice of his point of order. As I said on Thursday, I did not hear that remark. Indeed, I do not think that many did, because the matter was not raised with me at the time. However, as the hon. Gentleman said, it is now printed in Hansard. I repeat what I said on Thursday and add that in the words of "Erskine May":
Good temper and moderation are the characteristics of parliamentary language
I hope that we shall conduct our debates on that high plane.

BILL PRESENTED

SEXUAL OFFENCES ACT 1956 (AMENDMENT)

Mr. Graham Bright, supported by Mr. Alex Carlile, Mr. Ken Weetch, Mr. Nicholas Lyell, Mr. Gareth Wardell and Mr. Jerry Hayes, presented a Bill to amend section 6 of the Sexual Offences Act 1956: And the same was read the First time; and ordered to be read a Second time upon Friday 11 April and to be printed. [Bill 118.]

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [18 March].

AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the national Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for any relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Lawson.]

Budget Resolutions and Economic Situation

[Relevant documents: European Community Document No. 9792/85, Annual Economic Report 1985–86 and the unnumbered document, Annual Economic Report 1985–86 (final version as adopted by the Council).]

Mr. Speaker: No fewer than 27 right hon. and hon. Members have applied to speak and eight of them are Privy Councillors. In fairness to the House, I propose to interleave the calling of Privy Councillors with Back-Benchers and I propose to adopt a 10-minute limit on speeches between 7 pm and 8.50 pm. I hope that the Privy Councillors who are called before that time will bear that limit broadly in mind.

The Chancellor of the Duchy of Lancaster (Mr. Norman Tebbit): My right hon. Friend the Chancellor of the Exchequer has presented to the House a Budget which carries forward the objectives of this Conservative Government.
No Budget can stand alone, and I am glad to see that many commentators have noted the manner in which, in many respects, this Budget has taken further the aims and reforms of earlier Budgets. It is a Budget that continues the drive towards the kind of economic way of life—a freer way of life—which has been endorsed twice by the electorate of this country, and will be endorsed again.
No one on this side of the House has ever deluded himself into a belief in instant prescriptions. When we set out in 1979, we said that we were setting out on a long and difficult task. The world recession made the task more difficult, as did that final futile spasm of the old guard antidemocratic union bosses, the coal strike. They have both been overcome.
We had a coherent view of how the reversal of our relative economic and industrial decline could be achieved. It is a view which experience has reinforced. The cornerstone of the work has been the reduction and control of inflation. Friday's figures for the retail price index and my right hon. Friend's forecast of 3½ per cent. inflation by the end of this year, when compared with an average level of inflation at 15½ per cent. during the previous Labour Government, underline this achievement.
Of course, our success on that front has led some to forget the dangers of inflation. Indeed the question is sometimes put, should not we be prepared to accept a little more inflation to create more jobs? Memory should not be so short. It is not that long ago that, in that graphic phrase of the day, Britain was drinking in the last chance saloon, and yet even now there are those who would dash straight back in and call for another round—a round of spending and borrowing that would give us another inflationary hangover—[Interruption.] The hon. Member for Middlesbrough (Mr. Bell) may not be old enough to remember it, but it was fewer than 10 years ago.
Those were the days so rightly condemned by the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) who in 1976 said:
Higher inflation, followed by higher unemployment. That is the history of the last twenty years".
He was speaking of the 20 years from 1956 to 1976.
The right hon. Member for Leeds, East (Mr. Healey) spoke for almost everyone when, according to The Times of 18 March 1976, he told the Labour party:
There is a direct relationship between the level of pay received by those who have a job and the number of jobs the economy can support".
My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) put it in even harder and clearer terms when he said that
inflation, if left unchecked, presents the biggest single threat to the standard of living of every person in the land".
In contrast to our Labour predecessors, we have not been limited to occasional pious thoughts on these matters. We have taken the necessary actions, consistently over a period. To defeat inflation requires a consistency of purpose, a consistency of action, and yields a consistency of effect. Too many Chancellors in the past have been forced into mismanagement by the call for instant solutions. They converted economic cycles into roller-coaster rides that left the stomach in the mouth.
As we know, for many years in each successive cycle the peak of inflation was higher than its predecessor. My right hon. and learned Friend the Foreign Secretary, in his Chancellorship, broke that precedent. My right hon. Friend has built upon his success.
There is no safe level of inflation. It is the job of Government, through sound monetary and fiscal policies, to ensure—

Mr. David Winnick: Oh!

Mr. Tebbit: I shall read the figures to the hon. Member for Walsall, North (Mr. Winnick) if he is not clear about it.
It is the job of Government to ensure that there is both consistent downward pressure on inflation and room for growth in the economy. Of course, success in overcoming inflation cannot guarantee a fall in unemployment, but a rise in inflation will certainly lead inexorably to an increase in unemployment. Cause and effect are not near simultaneous. Jobs are not lost as soon as prices go up, nor are they recreated quickly when prices are brought under control. None the less, the benefits of a steady and consistent approach can be seen. Since the sharp and deep recession, we have seen five years of economic growth alongside a sizeable reduction in inflation. As my right hon. Friend said, 1986 is set for output growth of 3 per

cent. and inflation falling to 3·5 per cent. It is a record many ex-Chancellors would have dearly wished for during their term of office.

Mr. George Foulkes: It is an economy for the whizz kids.

Mr. Tebbit: In real terms, we now have an economy, and an industry, including manufacturing, which is growing, not declining. It suits the Opposition not to hear the facts. The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) in particular finds difficulty in hearing while he is talking, and I suggest he stops talking.
Total fixed investment in the economy last year was at an all time record in real terms. The CBI's latest trends inquiry gives the best combined response on prospects for output and prices since the inquiries began in 1975. Manufacturing exports are at an all time high. Of course the right hon. and learned Member for Monklands, East (Mr. Smith) will no doubt remind us that we have a deficit on our trade in manufactured goods. That is a tendency which has been growing—consistently exports were growing less quickly than imports—during the period of the last Labour Government as well as this Government. Manufacturing profitability is at its best since 1973 and productivity has increased by an average of 6 per cent. a year over the past five years.

Mr. John Smith: I am grateful to the right hon. Gentleman for giving way so early in his speech. In the interests of accuracy, will he point out that there was a substantial surplus on the balance of trade in manufactured goods when the Government took office? Now, for the first time in our history, there is a substantial deficit, and we are heading for a deficit of £4·5 billion. Can the right hon. Gentleman tell us how, under this wise Government, this has come about?

Mr. Tebbit: I said that there was a long established tendency in that direction because manufacturing exports were growing less quickly than manufacturing imports. That is not a new feature. It has continued and, not unnaturally, if such a tendency continues for long enough one moves from surplus into deficit.
In the meantime, in contrast to the Labour Government, we have maintained consistently a surplus on balance of payments.

Mr. Smith: What about oil?

Mr. Tebbit: Here we go again. I wonder whether the right hon. and learned Gentleman would say that in such a dismissive way if it was coal? What is wrong with exporting oil? It is not many weeks since the right hon. and learned Gentleman was saying that the whole of our strategy depended on revenue from oil. We have lost half of that in a matter of weeks. The economy still looks to be in very good shape.
It is only fair to recognise that some industrial capacity has been lost. It is only fair to agree that our competitors have not stood still waiting for us to catch up. We have begun to close the gap. Of course there are effects on unemployment. Our competitors have shed labour in manufacturing industry as they have raised productivity faster than demand has expanded and we have had to go faster still to close the gap in competitiveness.
A sign of the strength of the recovery is shown by recent figures for the mechanical engineering industry. This strength of recovery is most notable in the output of the


machine tool industry—a business in which the Opposition would have written us off years ago. Output rose by 20 per cent. last year, and that was the first rise for a long time.
Those in industry see good prospects and are encouraged by the Budget, despite the halving of oil revenues. It is fair to ask, in the light of what the right hon. and learned Gentleman and others have said on the matter, how the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) would have reacted to the dramatic change in oil prices had he been Chancellor. I imagine that, as usual, he would have over-reacted. People often do under stress, and he would have the stress of commitments to an extra £24 billion a year of public expenditure—alongside self denial of £4 billion to £5 billion of revenue from privatisation. He would have to wheel out the whole dreary paraphernalia of state intervention—the National Enterprise Board, the National Investment Bank, planning agreements and the like, with reactionary union bosses forced on to company boards while the right hon. Gentleman's penal tax policies would drive our most talented managers either to despair or to California. For luck he would direct pension funds money into a new generation of Meriden co-operatives, Scottish Daily News's, and the like. We know how he would react. We have seen him in office in the past when he was Secretary of State for Prices and Consumer Protection or, as his local newspaper the Birmingham Post referred to him, "Mr. Rising Price".
In an article in the Birmingham Post the right hon. Gentleman said:
We spent a lot of time in the last month looking at potato prices … once the drought has worked its way through and the pound has stabilised, we can expect a period when the inflation rate is going to move down again. We are on course, but we are travelling more slowly than we would have wished to".
Thus it would be back to the consideration of the price of potatoes by some wretched board and some other unfortunate Minister spending more time on that than ministerial duties warranted. [Interruption.] The right hon. Member for Sparkbrook says he would like to attack his record and is most willing to do so. We now have the prospect of stable prices and low taxes—the right hon. Member for Sparkbrook could not control the price of potatoes—with individuals and companies able to take their decisions in a free market, with fewer state monopolies, less state intervention, less fiscal bias and freedom to allow incentives to work and rewards to be available for hard work and success.
It is free enterprise and free consumers, not Governments, that will continue the process of creating jobs. The measures we have seen in this Budget and earlier Budgets show clearly how the prospect can be realised.

Mr. Richard Hickmet: Why is my right hon. Friend being so selective in his attack on the Opposition Front Bench? Would he care to comment on the proposal of the right hon. and learned Member for Monklands, East (Mr. Smith) to double the expenditure of the Trade and Industry Department? Will he comment on the effect of that and its cost upon our national finances and economic situation?

Mr. John Smith: Watch out, it is a trap.

Mr. Tebbit: Perhaps the right hon. and learned Gentleman will be kind enough to allow me to answer the question. I am always extremely selective in what I say

about the Opposition Front Bench. I select each of them in turn. I treat them with great courtesy and I tell the truth about them, which is a sad thing to have to do. My hon. Friend is right. The right hon. and learned Gentleman has proposed a massive increase in spending through the DTI.

Mr. Smith: Not doubling the expenditure.

Mr. Tebbit: I do not know whether it is double or merely 50 per cent. I do know that when the right hon. and learned Gentleman's Government left office there was massive spending in the DTI, not on new technologies or on bringing forward new industries, but on loss subsidies on the old fashioned state industries because they could not bear to deal with those industries' problems.
It is essential that tax reductions should be made where they do most good and that they should be matched by tax reform to ensure that tax does the least possible damage to incentives and enterprise and the maximum possible to promote a growing, flexible and responsive economy. One welcome consequence is the cut in tax on unincorporated businesses and the matching cut in corporation tax for small companies. This is only the latest in a series of reforms that have transformed the tax environment for business.
Perhaps most important, the business tax reform of 1984 is now coming fully into effect—a cut in special tax reliefs, matched by a cut in corporation tax rates. The main rate in 1986–87 is down to 35 per cent., which is the lowest rate in any major industrial country, and the small companies rate is only 29 per cent., which is the marginal rate for about 90 per cent. of unincorporated businesses. The result is not a fall in revenue—far from it.
The aim of the reforms is to reduce distortion, to improve the quality of investment and to strengthen incentives to enterprise and growth. Of key importance is the aim to see the basic rate of taxation down to 25 per cent. I understand that that aim is shared by the Social Democratic and Liberal parties. I take it that that is why they will vote against the 1 per cent. cut in the basic rate tonight.
Many of our critics may say of our tax policy, "Jam tomorrow". We already have a lower basic rate than at any time since the second world war. It is four percentage points down so far and there is the prospect of more to come. It is jam tomorrow—just like yesterday and today. Under this Government, the incentives to enterprise will grow. Schemes to encourage employee shareholders will bring a greater identity of interests between workers and their firms. It is dividends in the pockets of workers that may do more to increase harmony in the factories than union bosses in board rooms. These Budget measures will help to create jobs in the economy. At the same time, more direct help will be given to help the long-term unemployed back into work by individual advice, training and allowances for those who take jobs on less than £80 a week.
The hon. Member for Kingston upon Hull, East (Mr. Prescott) must be easily patronised—he said that he found these measures patronising—if he finds these measures patronising. They are a positive reponse to those who must feel left behind as others—some 400,000 in February alone—enter and leave the unemployment register. The increase of 55,000 in the community programme and of 35,000 in the number of enterprise allowance places offer renewed scope for those on the unemployment register to get back into work.

Mr. Foulkes: Rubbish.

Mr. Tebbit: There are limits, however, on how far it is possible to substitute Government schemes for jobs created in the market place without destroying more jobs. For many years, the United Kingdom suffered economic decline relative to our competitors. That has been halted or reversed.

Mr. Foulkes: Rubbish.

Mr. Tebbit: The hon. Gentleman says, "Rubbish". He should examine the facts. Since 1979, we have grown at the same rate as France and Germany.

Mr. Eric S. Heffer: A real comedian.

Mr. Tebbit: In 1983 and 1985, the United Kingdom topped the European Community growth league. Productivity growth in the United Kingdom's economy as a whole since 1980 has been much higher than that in France or Germany. Those are the facts, although Opposition Members may not like them.
Our growth in manufacturing productivity since 1979 has been second only to Japan among the seven major industrial countries. Since 1981, United Kingdom manufacturing exports have grown at least as fast as world trade. The average of United Kingdom inflation, as compared to inflation in the OECD, has fallen from being 60 per cent. higher under the Labour Government to only some 10 per cent. higher between June 1983 and December 1985. In absolute terms, the average level of inflation in the United Kingdom under Labour stood more than six percentage points above that of our competitors, whereas in this Parliament it has been only one fifth of 1 per cent. higher.

Mr. Winnick: If there is such a success story, and if enterprise culture, as the Chancellor described it last week, works, why does mass unemployment continue and why are many of our fellow citizens denied the opportunity to work? Why is the number of people who have been jobless for one year or more increasing? Is the right hon. Gentleman saying that unemployment will be substantially lower by next year's Budget?

Mr. Tebbit: The hon. Gentleman knows better than to try to tempt an ex-Employment Minister of any party to forecast unemployment.

Mr. Winnick: Answer my question.

Mr. Tebbit: I have explained more than once that jobs can be lost very swiftly and that they take a long time to regain. [Interruption.] That certainly applies to Labour Governments. They never last long and take a long time to get back into office.
Perhaps I might explain to the hon. Member for Walsall, North (Mr. Winnick) once again that, in 1979, our average productivity levels, especially in manufacturing industry, were way below those of our rivals. We would have had to shed many jobs just to reach the level that they were at in 1979. Since then, they have got further ahead. We are still pursuing them and having to shed jobs in many areas to reach the new levels. If the hon. Gentleman does not understand that, he has understood very little of his life so far. He has only to ask that great patron of the Labour party, Mr. Robert Maxwell, how many people he will have to dismiss from his newspaper

to achieve productivity levels found in the rest of the world to get an answer to part of his question about unemployment.

Mr. John Townend: How does my right hon. Friend explain the fact that there are more long-term unemployed in the south of England than in the north, where I come from, when it is clear to everyone that the south is far more prosperous?

Mr. Tebbit: That is a matter which may be explained better as my right hon. and noble Friend the Secretary of State for Employment's plan for counselling and advice for those who have been unemployed for more than a year works through the country.
Our record on inflation is far better than that of the Labour Government, when the right hon. Member for Sparkbrook and Mrs. Shirley Williams tried to control prices. So, as the hon. Member for Walsall, North asked, are the jobs that we would expect to be generated by the growing and more productive economy appearing?

Mr. Foulkes: No.

Mr. Tebbit: On the contrary. To an extent they are—680,000 new jobs have been created since June 1983. That is better than the rest of the Community put together. [HON. MEMBERS: "They are the wrong jobs."] They are, none the less, jobs which people are very pleased to have. However, that is plainly not enough. The past five years of manufacturing output growth, now 13 per cent. above its lowest point in 1981, have been reflected not in gains in new jobs but in long overdue gains in productivity, without which there would have been even more closures and even more job losses, as I have just expained to the hon Member for Walsall, North, although I doubt whether he has yet caught on to the point.
The major obstacle to translating that productivity performance into new jobs is the tendency of unit labour costs, fuelled by high wage increases, to outstrip those of our competitors. The problem is not peculiar to the past few years. From 1974 to 1979 there was a relative decline of 25 per cent. in our international competitiveness. Our better performance recently is still not good enough. Industry must control its unit labour costs.
Faced with reality in 1976, the right hon. Member for Leeds, East (Mr. Healey) called for a cut in living standards. He limited pay rises to 5 per cent. when inflation was running at more than 20 per cent. That would be the equivalent of a 10 per cent. pay cut with inflation at 5 per cent. as today. My right hon. Friend is certainly not asking for that, but we cannot exploit our improving productivity and output performance to create enough new jobs until earnings come back more closely into line with increases in productivity and our unit labour costs match those of our main competitor countries. That does not mean wage cuts. Those in work can enjoy an improving real level of earnings, as they have done under this Government—some 2·1 per cent. growth in real earnings per annum compared to less than half of 1 per cent. during the period of the Labour Government.
However, although those pay increases must be related to productivity and competition, as taxes are cut and inflation reduced, low pay rises can still mean a sharply improving standard of living. Moderation in pay helps, above all, the unemployed to be priced back into work. [Interruption.] The hon. Member for Carrick, Cumnock


and Doon Valley may sneer, but I shall return to this point later. This Budget, like its predecessors, improves the climate for job creation, but neither it nor any Budget can create—

Mr. Heffer: Rubbish.

Mr. Tebbit: The hon. Gentleman is going on a little. He may one day learn something, and, even if it takes us from the time that he is seven until he is 70, we shall keep trying.
This Budget improves the climate for job creation, but neither it nor any Budget can guarantee that jobs will be created. Foolish pay increases, strikes, poor management, bad product design or indifferent after-sales support, obsolete technology—any one of these can destroy existing jobs or abort new ones. Nor is the process immediate. A customer may be quickly lost and it may take years to regain his favour. The economic facts of life do not change with changes of Government, much as the Opposition Front Bench would like us to believe.
It is instructive to look back 10 years and to see how a Labour Government fared. From his sixth Budget in April 1976, the right hon. Member for Leeds, East careered on through that year along to his ninth Budget in December, swinging from wild and foolish boasting of success to come to dire threats of disaster just ahead. A Labour party press release captures the more windy and vainglorious mood. It says:
The right hon. Denis Healey, Chancellor of the Exchequer, speaking at the Annual Dinner of Edinburgh East Labour Party … said:—'The new 4½ per cent. pay agreement between the Labour Government and the TUC can transform our prospects … It means we can be on top of inflation within eighteen months from now. It means more jobs and more in the shopping basket'
every prediction was wrong. He went on:
Already the tributes to this achievement are pouring in from all over the world".
He might have added, "except from the TUC and the trades union members."
As we look back on the sad tale of broken pledges, we can see the huge borrowings and humiliation that came to the right hon. Gentleman at the hands of the International Monetary Fund. Hence the calls that he made for savage cuts in the standard of living for millions of ordinary workers. The deficit on our invisible trade grew, unemployment grew and the whole mess grew worse until it collapsed in the winter of discontent. Would it be any different next time?

Mr. Stuart Bell: Yes.

Mr. Tebbit: It would be worse. In those days, the Leader of the Opposition was one of a small minority undermining the then Chancellor. Next time, he would be in No. 10 undermining his own Chancellor, if he had the chance.
On Tuesday last, the Leader of the Opposition was put up to say that this Government have borrowed more than any other Government in history. Of course, I am sure that his scriptwriters knew, even if they did not tell him, that in real terms they have done nothing of the sort. The PSBR has been brought down from 9·5 per cent. of GDP in 1975–76 to a Budget forecast of 2 per cent. in 1985–86. Inflation has fallen from 26·9 per cent. in August 1975 to about 5 per cent. for a comparable period 10 years on. The two sets of figures are not coincidental.

Mr. Bell: What would be the public sector borrowing requirement without asset sales?

Mr. Tebbit: Higher, but there is nothing wrong with asset sales.
In contrast to the strictures on borrowing, on Wednesday of last week, the right hon. Member for Sparkbrook sought to remove what he termed our prejudice against borrowing. He and the Leader of the Opposition should get their act together. Are they for more borrowing or for less? Are they set once again to go down what the right hon. Member for Cardiff, South and Penarth called the primrose path together, hand in hand?
They are for more borrowing—and not just a little more but a lot more. Last Wednesday my hon. Friend the Member for Lewisham, West (Mr. Maples) asked the night hon. Member for Sparkbrook by how much borrowing would go up. The right hon. Gentleman said he would give the figures, but failed to do so. As he has had some time to think since last Wednesday, I am prepared to give way to him so that he can let us have the figures now. By how much would borrowing go up under a Labour Government? If the right hon. Gentleman will not tell us the answer, we have to do the sums for him, and we shall keep doing the sums and adding them up.
During the debate over the past few days, Labour Members have criticised the Budget, but how proud the right hon. Member for Leeds, East would have been if he could have presented a Budget that was so popular and effective. Labour Members have said that the Budget does nothing for the poor, nothing for jobs, and is all for the rich. Nothing could be further from the truth. The Budget continues the attack on inflation, the cruellest tax which falls most heavily on the poor, not on the wealthy, who have assets to set against it. This tax is one of the worst agents of job destruction. Labour Members ignore the growing economy, which is the source of new jobs. They ignore the further direct employment measures that add to those announced in the autumn statement.
From time to time the Opposition have given us some glimpses, obscure and contradictory, of their economic policies. The right hon. Member for Sparkbrook does not want to tell us about the key to it—how much they would borrow. He refuses every invitation to give us those figures. We have seen it all before. The hon. Member for Kingston upon Hull, East said:
we are obliged to spell out precisely where the jobs will come from and the consequential effects on inflation, on the balance of payments and on borrowing "—[Official Report, 20 March 1986; Vol 94, c. 438.]
The right hon. and learned Member for Monklands, East will not thank the hon. Gentleman for that, and nor will the right hon. Member for Sparkbrook. The right hon. and learned Member for Monklands, East said that it is important to cost everything in detail—he would say that, would he not?
Nor will we allow the right hon. Member for Sparkbrook to present only those aspects of his policies which he believes would appeal most—that is his call to the many to confiscate from the few. It would not be a joke if the right hon. Gentleman's borrowings and taxings ever came to pass, any more than it was when the right hon. Member for Leeds, East was calling for savage cuts in the standard of living. We shall make sure that all the measures proposed by the Labour party will be considered together. We shall see to what levels of taxes or borrowing they would bring us.
I notice that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) has not managed to attend the debate today. He has a plan for sneaking through the middle unnoticed. He expects to give a stimulus to the economy, modest in size but far-reaching in its effects. He just cannot let go of that old demand lever. He and his colleagues would take back the 1p reduction in the basic rate of tax, and they would be back into the game of demand management.
The alliance foresees a 50 per cent. increase in the size of the PSBR. Since the Budget there has been a fall of 1 per cent. in interest rates. How adverse a reaction—by contrast with that vote of confidence, and that of the stock market—would there be on interest rates and inflation if we were to follow the course advocated by the right hon. Member for Hillhead? He would not carry the confidence of industry or the markets. Nor would industry welcome his incomes policy proposals. The hon. Member for Stockton, South (Mr. Wrigglesworth) says that we must not have a low-paid, low-skill economy. I agree. But by putting Government controls in place of a free market for jobs and skills, that is what he would bring about.

Mr. Dennis Skinner: The hon. Member for Stockton and Barclays.

Mr. Tebbit: I do not think that I need any interventions from the hon. Member for Bolsover (Mr. Skinner). I am looking forward to the uncouth sneer being swiped off his face when his attack on the Prime Minister is put in its place very firmly indeed. He will regret having made a fool of himself, just as the right hon. Member for Hillhead will do.
We can see plainly the alternatives to the skilful Budget of my right hon. Friend the Chancellor. The Labour party's approach would be to go straight back to 1976 as fast as it could and straight back to a siege economy. The Liberals and the SDP would get there by a more devious and slower route—what those with long political memories would call the Bassetlaw by-election approach.

Mr. Robert Maclennan: Those with not so very long political memories recall that when my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) was Chancellor of the Exchequer there were 600,000 unemployed and we had a negative PSBR.

Mr. Tebbit: Those with long political memories will also remember the conduct of the right hon. Member for Hillhead. We recollect the Bassetlaw affair, which was typical of the style of that Government and of the right hon. Gentleman. Two days before the Bassetlaw by-election Mrs. Castle swore that there was no economic freeze on the way. But, just a matter of weeks later, the right hon. Member for Hillhead, as the Labour Chancellor of the Exchequer, announced £250 million of additional taxation, new action to tighten the credit squeeze and all the normal paraphernalia of a Labour Budget. That is the Bassetlaw factor, and it is typical of SDP policies.
We have no urge to go back to the policies from which our ills have sprung. The right hon. Member for Sparkbrook is familiar with this story as he was a supporter of that Labour Government and of the right hon. Member for Hillhead. By contrast, our policies will bring us to

where we can see not only an improvement in this country's relative economic position but steady growth in the economy. That is the only way—although nobody would deny that it is a slow and difficult road—to generate enough new jobs to overcome rising unemployment.
Our objectives, to which the Budget is addressed, are to further the development in this country of a new economic liberalism, or people's capitalism—call it what one will. It means people setting up in their own businesses—and 750,000 have done so under this Government. It means people owning the homes in which they live—and more than 800,000 former council tenants now do so in the teeth of opposition from Labour Members. It means people owning shares, joining in the task of providing the capital to build our industry, and determining its future and theirs. Under this Government the number of those owning shares has more than doubled, and this Budget will mean that more can do so.
It means more people owning a stake in the firm in which they work, sharing in its risks and its rewards. More than 1 million employees now take part in share schemes—[Interruption.] Opposition Members may sneer and laugh. They do not like people owning shares in businesses. Above all, they do not like trade unionists doing so. But we want many more to own shares.
The Budget means people keeping more of their income to determine for themselves how it should be saved or spent. It means more individuals and more companies contributing their own money to charities, and helping one another directly. It means more people owning their own pensions. It means more people running their own trade unions. That is something that the Labour Front Bench refuses to accept. It means people knowing that they can seek work without closed shop restrictions, or finding that employers are forced to pay too much, and cannot afford to take them on. It means people being free to choose where and how to invest, without restrictions and distortions, so as to create the wealth that is needed and to create the jobs that are needed.
Those are the Government's and the Budget's objectives. They are the right ones for the country. The Budget takes us in the right direction, towards those objectives, and I commend it to the House.

Mr. John Smith: I shall try hard to avoid being drawn into all the irrelevancies of the peroration of the Chancellor of the Duchy of Lancaster, but I am sure that he will forgive me if I touch lightly on one point. He commended a change in trade union attitudes, for which he accepted responsibility. On behalf of the whole Labour and trade union movement, may I say a very genuine and warm "thank you" to him for instituting the political fund ballot? I think that all the ballots have now been held, and every single one of them has confirmed by a large majority the decision of British trade unions to have political funds. Indeed, some trade unions, which had failed to get political funds before, were able, in the wave of opinion generated by the Chancellor of the Duchy of Lancaster—[Interruption.]

Mr. Tebbit: I am most grateful to the right hon. and learned Gentleman for seeing the good sense of my plans, which he and his colleagues opposed. However, if the facts had been set out fairly in any of those ballots, the


result might have gone the other way. But that is the rub of the green. I accept the democratic process, and I hope that the right hon. and learned Gentleman will also accept it when it goes against him.

Mr. Smith: If the right hon. Gentleman has any complaint about the conduct of those elections, and if that is his excuse, he should take up the matter with the Chief Registrar of Friendly Societies. I am sure that he will listen to any complaints. But instead of congratulating the trade unions, the right hon. Gentleman has to concoct another smear. That is typical of him.
There is a rumour among trade unions that there is a trophy called the Margaret Thatcher challenge trophy, which was to he given to the union with the highest yes vote in the ballot. The union is now wondering what to do with it. I suggest that it should present it to the right hon. Gentleman, with the grateful thanks of all concerned.

Mr. Winnick: Does my right hon. and learned Friend agree that it is widely believed that companies should do precisely the same as trade unions, and should have a ballot before donating to political causes? Is it not remarkable that the Chancellor of the Duchy of Lancaster should lecture everyone about democracy when he has not been elected to his position as chairman of the Tory party? Why is there no elementary democracy in the Tory party?

Mr. Smith: I am grateful to my hon. Friend for reminding me about that. The Chancellor of the Duchy of Lancaster is always saying that what is sauce for the goose is sauce for the gander, so now that he is chairman of the Tory party perhaps he will tell us—[HON. MEMBERS: "Talk about the Budget."] The right hon. Gentleman distracted me and I am sure, Mr. Deputy Speaker, that you will bear witness to that. I do want to deal with the Budget. But the right hon. Gentleman has an opportunity now, as chairman of the Conservative party, to acquire a reputation for consistency and fairness and to propose, in the next legislative Session, similar treatment for companies in their donations to his party.
In recent years it has been customary for the final day of debate on the Budget to cover matters relating to trade and industry. It is usual for the Secretary of State for Trade and Industry to open the debate. The Chancellor of the Duchy of Lancaster criticised the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) for not being here, and would no doubt be ready to criticise any other hon. Member for not being here. But he should perhaps note that the Secretary of State for Trade and Industry is not here, and that as far as I can see not a single member of that Department has seen fit to come to the Chamber for the debate.
It was appropriate for the Chancellor of the Duchy to speak in the debate last year, because he was then the Secretary of State for Trade and Industry. This year, however, he appears in a different guise. I wonder why he decided to speak in this debate. Is he worried that he might somehow be forgotten if he does not manage to speak in debates in the Chamber? Why did he elbow aside either the Paymaster General or the Secretary of State for Trade and Industry in order to speak in this debate? Once again the Secretary of State for Trade and Industry was unfortunate. Where is he? Is he or his Ministers away negotiating some other deal to sell off another part of British industry?
There is one happy feature about the right hon. Gentleman being here and it is that he is closely involved in the affairs that may be keeping the Secretary of State for Trade and Industry away from the Chamber. When he was Secretary of State for Trade and Industry, did not the right hon. Gentleman invite General Motors to make an application to take over Leyland Vehicles and Land Rover? Was he not the Minister responsible for starting the secret talks that went on for 18 months until they were flushed out by the Opposition when we found out the information and challenged Ministers?
The right hon. Gentleman appears to have been involved in bringing the talks to an end. Has he reflected since what they were all about? Last Sunday The Observer told us about the right hon. Gentleman's activities. We were given a blow-by-blow account of these frenetic negotiations. The Observer said:
All week they had been in discussions with Mr. Channon and his officials—with Mr. Norman Tebbit coming in and out. The effort was to find a compromise formula that would be palatable to the backbenchers.
On Wednesday they thought they had agreement on the 49–51 principle with GM eventually taking the majority after it had proved its 'good citizenship'.
Then Mr. Channon came back, saying this would not work, and suggested … an overseeing board".
In view of his close involvement in these matters the right hon. Gentleman might have told us something about that. After all, we are discussing trade and industry and the motor vehicle industry is an, important matter for us in the Budget. The right hon. Gentleman has a direct and personal responsibility for the fiasco that the whole British Leyland affair has become. If a charge of anti-Americanism is to be flung at anyone, what about a company like General Motors that spent £1 million on a wild goose chase? Will that company not feel that there is a tinge of anti-Americanism in this Conservative Government—and a rather expensive one at that?

Mr. Tebbit: I hope that the press release of the right hon. and learned Gentleman's speech is now over. He has been on his feet for nearly 10 minutes. Perhaps now we could get on with the debate on the Budget—not least as the whole Treasury team is here eager to discuss the Budget and to hear what level of PSBR the right hon. and learned Gentleman thinks there ought to be in a Socialist Budget. The team is also eager, as am I, to take him to one side later on and show him several different versions in several different newspapers of the recent talks.

Mr. Smith: The easiest way of solving that problem is for the Government to tell us what is going on. They have had many opportunities to do that and if there is a problem of misrepresentation it can be cleared up.

Mr. Hickmet: rose—

Mr. Smith: The hon. Gentleman is stopping me from getting on with the Budget, but I shall give way.

Mr. Hickmet: The right hon. and learned Gentleman's party made its position clear on the link between General Motors and British Leyland. It does not want that link at any price. How will he react if, for example, the operations of General Motors in Britain are wound down as a result of the policy that his party has adopted?

Mr. Smith: I hope the Chancellor of the Duchy of Lancaster will forgive me if I answer that intervention, even though it means I shall have to talk a little bit longer. It is an odd conclusion to draw, is it not, that when the


Government initiate a project that invites General Motors to acquire parts of British Leyland and that project does not come off, if General Motors then decides to do something with its plant, that is the responsibility of the Opposition. That is a new one on me.
Whether in his role as chairman of the Conservative party or as an ex-Secretary of State, the right hon. Gentleman had a shot at defending the Budget. However, he made very little attempt to deal with trade and industry. He said little about manufacturing industry and gave us a rather lame and tendentious explanation about the debilitating balance of trade deficit on manufactured goods. There was a substantial surplus when the Government took office and now we are heading for a £4 million deficit. No explanation has been offered about why that has happened under this wise and beneficent Government, and the right hon. Gentleman did not even give us a clue about an explanation.
We know that for a long time there has been what one might call massive scepticism by the Government about manufacturing industry. I know they are trying hard to change their tune, but in 1981 the Chancellor of the Exchequer said in a memorable phrase:
I do not understand the importance which the Opposition and some Tories give to manufacturing industry.
That is on the record. It is as notable as his other famous prediction that young people in Britain would get not so much low-tech as no-tech jobs. The Chancellor can deny it if he likes but he made both of those statements.

The Chancellor of the Exchequer (Mr. Nigel Lawson): That sort of dishonest quotation does not serve any purpose. The right hon. and learned Gentleman did not give the full text. What I said was that, although high technology had an important part to play in future, many future jobs would not be so much low-tech as no-tech. I did not say all jobs: I said many of them. That is a fact in the United States and here.

Mr. Smith: The right hon. Gentleman appears to concede that I quoted him correctly. I am not being accused, nor could I reasonably be so accused, of misquoting him. I said, "not so much low-tech as no-tech" and in his intervention the right hon. Gentleman quoted the very words I used. His excuse is that he did not say all the jobs would be low-tech, just many of them. [Interruption.] If we go on the way we are going, that will be the result of the Government's policies. The right hon. Gentleman might learn something by listening, so let me repeat what I said. If the Government continue with their present policies, that will be the result.
What an ambition for our young people! Let us give them high-tech jobs. Would not that be a better ambition for the Chancellor of the Exchequer and the Government? As many as possible of our young people should be obtaining high-tech jobs, and we would be going in that direction if the Government were not turning them away from technical colleges and polytechnics and universities and were encouraging them to stay on at school.[Interruption.] When someone talks about opportunity, all the Government can think about is money. They can never draw the balance between the enjoyment of human opportunity and the reasonable investment required to achieve it.
The Chancellor is trying to change his stance. We saw a rather pathetic attempt at that in his intervention. That is because he is beginning to realise that the plan that was there before will not work. That plan was that Britain could live off service industries and oil revenues and the remittances from foreign investments. It was felt that we could get by quite nicely on that and the Government did not need to worry too much about manufacturing industry. We heard all the speeches at that time about the undue importance attached to manufacturing industry, but even the Chancellor now realises that a number of things are changing. The nation is becoming more and more convinced that the catastrophic consequences of a decline in our manufacturing industry are quite unbearable.
The Aldington report was published last year. All that gets from the Chancellor of the Exchequer is a snigger. The distinguished authors of that report were rubbished before the ink was dry on the document. Not only was it turned down without being read, but attacks were made on its individual authors. That report makes good reading for anyone who wants to understand Britain's industrial predicament. It said what would happen when the volume of North sea oil declined. The report was not able to predict any more than the Government were able to predict that the value of North sea oil would decline in an even shorter period. That has accentuated the problem and the Chancellor knows that more than anyone else in the House, or at least he ought to.
We have now been brought close to the reality of our economic position. North sea oil is not so obviously helping us. Of course it is still of enormous benefit to the Government, although not as much benefit as it was, but still useful in terms of balance of payments and our overall balance of trade and Government revenue. To this Government it has meant tens of billions of pounds and yet they have wasted most of that money. They have had those funds in a way that no other Government have ever had them. They have had that money without having to go through the complicated business of raising it by taxation or by cutting expenditure. [Interruption.] It was taxation which the Government inherited. North sea oil was on stream in 1980 and the Government inherited the revenues. What point are the Government seeking to make? If they are saying that they did not have a marvellous windfall of North sea oil revenues, no one will believe them. [Interruption.] I should like to say what the Chancellor of the Duchy of Lancaster kept saying to my colleagues—if the right hon. Gentleman would listen occasionally, he might learn something to his benefit.
That is why there is apprehension about the crumbling technological base of our manufacturing industry. The failure to invest in British manufacturing industry, to develop our research and development and to provide proper training within industry are at the root of our economic problems.
I should like to consider quickly some of the facts. Manufacturing output stagnated in 1985 and is still 6 per cent. below the 1979 level. Manufacturing investment is still more than 10 per cent. less than the 1979 level. The United Kingdom's manufacturing trade deficit is forecast to increase to £4·5 billion in 1986, although we had a substantial surplus in 1980. One would not guess that that was the position from the Chancellor's complacent survey in his Budget speech. There was one glimmer of light in


his speech—one faint dawning of comprehension. Referring to the effect on the economy of the fall in the oil price, the Chancellor stated:
This provides British industry with an outstanding opportunity both to increase its exports and to reduce import penetration in the home market, but it will only be able to seize that opportunity if it meets two conditions. First, it must keep firmer control of its labour costs. Secondly, it must spend more of its much healthier level of profits on investing for the future in research and development and in training. Both the opportunity, and the responsibility to see that it is not thrown away, rest fairly and squarely on the shoulders of British management."—[Official Report, 18 March 1986; Vol. 94, c. 169.]
First, there was an admonition to industry to keep control of its labour costs. But there was no admonition to the City. There was no feeling that perhaps labour costs in the City were rather high because of the huge salaries that are paid. The "golden helloes" managed to avoid any action by the Government in the Budget. I wonder whether the Chancellor of the Duchy of Lancaster ever says to the stockbrokers, "If you would cut your wages a bit you would create more jobs." On the basis of some of the very large salaries of stockbrokers there must be enormous scope for job creation in the stock exchange.
If the proposition of the Chancellor of the Duchy of Lancaster is fundamentally true and if one divides a stockbroker's salary by five, there would be five more stockbrokers—or at least that is what the right hon. Gentleman says to the workers.

Mr. Tebbit: rose—

Mr. Smith: I am to be given an explanation?

Mr. Tebbit: I say the same to people in the City' as I say anywhere else—that if they allow their costs to become higher than those of their competitors they will lose their market share and jobs, their salaries will fall and the "golden helloes" will turn into brass goodbyes. They understand that lesson more clearly than those in other industries.

Mr. Smith: If that is the lesson which they understand, it is amazing that salaries keep going up instead of coming down. If the right hon. Gentleman has been having chats with them, he has been singularly unconvincing and unpersuasive. Everyone knows that salaries in the City and in the stock exchange are hopelessly out of control. It does not help if the Government say to people who are struggling to make ends meet, "You should be careful about asking for wage increases or for improvements in conditions", because they can see the conditions and wages offered to people on high salaries.

Mr. Donald Stewart: Does the right hon. and learned Gentleman agree that there is no need to test the theory of the Chancellor of the Duchy of Lancaster about low wages equalling more jobs, because long ago the Low Pay Unit worked out that the areas where wages are lowest are exactly the areas where unemployment is highest?

Mr. Smith: I am grateful to the right hon. Gentleman. He is well aware, as are many other hon. Members, of the fundamental principle which seems to motivate the Government—that we need high wages to give incentives to people at the top end of the wage bracket and low wages to give incentives to people at the bottom end of the wage bracket. We have noticed throughout the Budget the attempt to drive more people into low-paid

temporary occupations. The drive is not so much to find jobs as to accentuate the prevalence of low pay in the economy. I am sorry to say that a number of the Budget measures are leading in that direction.
The Chancellor has recognised that there should be more investment in research and development and in training, but the trouble As that he thinks it is simply a matter for industrial management. He thinks that the investment rests on their shoulders and implies that it does not rest on anyone else's shoulders. I believe that it is a matter for the whole community because the whole community will be affected by a failure to invest in industry and in research and development and a failure to develop adequate training. If we had employers like those in West Germany, we could perhaps hand over training to them. The West German employers take their responsibilities serously. No one can say that British employers, left to their own devices, have a good record on training. The Chancellor of the Duchy of Lancaster has an inglorious record, having dismantled 16 of the 23 industrial training boards.
On 12 March 1986, the hon. Member for Bedfordshire, North (Sir T. Skeet) asked the Secretary of State for Education and Science
how many of the leading industrial states have progressively increased expenditure on civil research over the past five years; and what is the comparative position of the United Kingdom expressed in real terms."—[Official Report, 12 March 1986; Vol. 93, c. 474.]
In an informative answer, the Minister for Information Technology gave some alarming statistics. The increase in gross research and development expenditure from 1979 to 1983—the latest date for which figures were available—was 3 per cent. in the United Kingdom. The increase in the United States was 18 per cent., in Japan 44 per cent., in Germany 10 per cent., in France 10 per cent., in Italy 45 per cent. and in Canada 32 per cent. The United Kingdom is not just bottom of the league but is lamentably bottom of the league, with only a 3 per cent. increase in civil research and development in the past four years from a total budget of $12·6 billion. That is appalling. If Britain continues to invest such a minuscule part of its assets in research and development, it will lose the technological base of its industry and will not be able to develop the new products and processes for tomorrow.
The Government's contribution, through their direct funding of research and development, is pitiful. There is not a research institution or university that is not pleading for more resources for primary research and development. The Government's niggardly attitude is disgraceful. If the Government gave research institutions and universities what they gave in a handout to abolish inter vivos gifts and capital transfer tax, that would be a useful start. Why not give that £55 million to research and development instead of to the rich?

Sir Julian Ridsdale: Does the right hon. and learned Gentleman agree that the increase in profitability to 8 per cent., compared with 0·5 per cent. in 1979, is a means of getting increased research and development in companies?

Mr. Smith: That would be understandable if companies were doing that now. It was only a matter of days ago that Sir Brian Nicholson, the Government Chief Scientist, in evidence to the House of Lords Select Committee on Science and Technology—

The Minister of State, Treasury (Mr. Peter Brooke): Sir Brian?

Mr. Smith: Yes, as I understand it—the Government's Chief Scientist. He said that the Government were deeply upset at the failure to invest, given the substantial increase in the profits of British companies. I do not think that the Government's excuse will wash. I am given to understand that the Department of Trade and Industry, which is not represented here today, is pressing hard for companies to do that, and so they should.
Why do the Government turn their back on supporting schemes for research and development? Why is there no reference in the Budget to training in industry? Why are there no fiscal incentives, schemes or plans? Why are no ambitions revealed in the Budget? The Government simply have no industrial strategy. They are just moving about the market place, hoping that it will come right. They are not taking any steps, such as those taken by most of our major competitors, to ensure that fundamental aspects such as research and development, training and investment are securely put into place. There is a failure to comprehend that there is more to industry than just giving freedom to the entrepreneur and his wealth. One cannot leave it at that. If the entrepreneur does not invest his wealth wisely, the consequences for the whole of the community are devastating. There may be increased unemployment. There may be diminished opportunity for our young people. There may be a failure to conquer the markets on which the standard of living of us all—not just of the entrepreneur—depends. That is why this is a legitimate matter for community concern.
Today, investment is not being made in new products because we are in the grip of merger mania. When a company that has extra money decides what to do with it, it is far too easy for it to gobble up another company rather than to improve its products and its market share. It may improve its market share but it will do so by eliminating its competitor, because the natural tendency of unregulated markets is towards monopoly. One would have expected even a Conservative Government, recognising that, to adopt a tougher policy on mergers and monopoly, but we do not find that.
Even more lamentably, the present situation in which the creditor can too easily acquire his competition forces industrial managements continually into short-term profits. They must have short-term profits and those profits must be reported to the stock exchange to keep the predator away. When there is a choice between short-term projects—which represent essential defensive security—and long-term investment, long-term investment goes by the board, and the Government look on complacently. The Government have been reviewing competition policy endlessly and continuously for a number of years without doing anything about it. Even the Governor of the Bank of England said the other day that the matter had got out of hand. It is a pity that we do not have a Chancellor of the Exchequer who would say a sensible thing like that.
We need a better investment plan. That is why the Labour party proposes that we should have a national investment bank, which would make sure that long-term investment was secured for British industry. However, when sensible and practical suggestions are put forward, all we hear from right hon. and hon. Gentlemen on the Government Benches are silly party political sniggers. The

national investment bank would make sure that there was long-term investment at suitable rates of interest. In West Germany, a billion pounds was invested in small and medium-sized businesses by KFB, an admirable bank to which the House of Lords report paid particular attention. Why should not this country have mechanisms to ensure that there is investment in the wealth-creating sectors of the economy? Why cannot the Conservative party have the intelligence to appreciate a good idea when it is presented with one? [Interruption.] One of my hon. Friends suggests that there is not enough of that commodity to go around. There is distressing evidence that that may be so.

Viscount Cranborne: The right hon. and learned Gentleman rightly refers to the manufacturing sector of the economy as the wealth-producing sector. No doubt, like many of us, he reads The Economist. He will have seen there that the wealth-producing sector also embraces the City, about which he has been so disparaging. No doubt he has noticed that the invisible earnings not only contribute to the wealth of this country but contribute a very large number of jobs. In the unlikely event of the right hon. and learned Gentleman returning to power, would he kill the City's earning capacity in his quest for manufacturing industry?

Mr. Smith: I thought that the hon. Gentleman had followed my argument that to depend on the City was not enough. We need to manufacture. The City is rather better at creating jobs in other countries than in our own. The Chancellor boasted about the amount of money that we have invested abroad. He said that we could live like remittance men. He said that there would be a flow of remittances returning from the investments.
The hon. Member for Dorset, South (Viscount Cranborne) is slightly behind the times. He is playing the tune to which I referred earlier—that we can take some chances with manufacturing industry. However, the Government have become a little worried and have changed their stance. It is a pity that the hon. Gentleman has not noticed that. We need to set three engines of recovery in motion. We need a proper investment policy in manufacturing industry, a proper research and development policy and a proper training policy. We are slipping in all three areas.
I must mention one other factor — the near disappearance of regional industrial assistance. I calculate that the Government have more than halved the amount of support for industry that they provide. Hon. Members may recently have seen a very revealing "World in Action" programme on television about some young people from Middlesbrough who went down to High Wycombe to seek work. Although they went by bus, they were following the advice of the Chancellor of the Duchy of Lancaster to get on their bikes. They went to High Wycombe because they could find no jobs in Middlesbrough. One of them found a reasonably well-paid job fairly quickly, because he had a skill — a skill for which there was no use in Middlesbrough. He was clearly a man who wanted to find work. He was prepared to separate himself from his family to find it. I think that he was paid £120 net in the factory. It cost him £57 to pay for his digs during the week and a visit home every week or fortnight—I forget which—to see his wife and children. He explained that he could not go on like that, with so little left after the £57 had been subtracted, and that he was contemplating returning to Middlesbrough.

Mr. John Townend: rose—

Mr. Smith: The hon. Gentleman should listen with a little sympathy and understanding—

Mr. Townend: rose—

Mr. Smith: I will not give way to the hon. Gentleman. He does not deserve to be given way to. If the public could have seen the look on the hon. Gentleman's face as I was describing the predicament of those people, it would have been a telling political indictment.
Another person from Middlesbrough was told that he could go to High Wycombe too. He came down with his girlfriend; they were contemplating getting married. He too found a job—not so well paid—and his girlfriend found a job in a cafe. They put their wages together and decided to try to set up home in High Wycombe. They went to the estate agents to see whether they could buy a house. They tried every estate agent in High Wycombe, but even the cheapest house cost £10,000 or £15,000 more than they could afford. At the end of the programme, the question was asked: what should they do next? The man who had left his family in Middlesbrough could not take them to High Wycombe because he could not afford to buy a house and there were no council houses available. Should he remain separated from his family and continue to pay so much for lodgings and travel?

Mr. Nicholas Budgen: rose—

Mr. Smith: Should the other couple live perpetually in digs or furnished lettings in High Wycombe because they could not buy a house? Those people followed the right hon. Gentleman's advice, and that is what happened. Any sensible Government would say, "Why not get the jobs in Middlesbrough, and get to the heart of the problem? Why not spend some of our communal resources helping to create jobs in Middlesbrough?" That is what regional industrial assistance is all about.
That story is revealing about life in modern Britain. There are opportunities, wages and jobs in the south, but very little is available in the north, and the term "north" covers an increasingly wide area of the country. There is a deep divide, which is worrying people in the south as well as the north. Our citizens do not wish to live in a country in which the divisions are becoming so sharp and ugly. A sharp and ugly division is growing between the very well-heeled and the growing under-class, and it is an affront to our conscience.
The Conservatives could give long-term supplementary benefit to the long-term unemployed. They could give about £10 a week to poor unemployed families if they did one simple thing—restored the investment income surcharge which was removed a few Budgets ago. The amount thus saved would more or less meet the cost of long-term supplementary benefit. The investment income surcharge was imposed on investment incomes of over £7,000 a year. People had, by definition, to have £70,000 capital before they benefited from the change. What proper society would give the money available to such people and deny it to the suffering long-term unemployed, the poor families and the needy? In my book, that is not a political choice but a moral one. It is one which the people of this country, when these matters have been made even more clear to them than they have been already, will have no hesitation in answering.
The Budget is both unfair and irrelevant. It is unfair to the divisions between north and south and it is unfair to the divisions between rich and poor. It is supremely irrelevant to putting our manufacturing industry and our economy back on their feet. It is a matter of regret for the whole country that this is happening. It is a matter of shame for this Government.

Mr. Leon Brittan: In his speech the right hon. and learned Member for Monklands, East (Mr. Smith) dealt with a number of wide and important issues which have been with us for a considerable period. I do not agree with his conclusions. However, he has been wise, from his own narrow point of view, not to focus very much upon what the Budget actually says. On the other hand, I welcome the opportunity to join those who have congratulated my right hon. Friend the Chancellor of the Exchequer on combining in his Budget a continuing policy of sound finance with the imagination and ingenuity of his proposals.
When I was Home Secretary, naturally I was particularly anxious, as the Minister with responsibility for policy towards the voluntary sector, that the Government should give what help they could to charities. I am delighted that the Chancellor has now been able to give fiscal reality to what were then just a number of embryonic ideas. Equally, I welcome the measures to encourage investment in equities and the proposals to stimulate profit sharing. However, all those measures must be seen in the context of the central Budget decisions on the Government's fiscal and monetary stance.
It is no accident that from the moment when the Government took firm and unpopular action in 1981 to bring the public sector borrowing requirement under control we have seen steady and continuous growth. Therefore, I applaud the Chancellor's decision to continue the downward path of public borrowing as a percentage of gross domestic product and, indeed, to set the public sector borrowing requirement at £7 billion, which is slightly below the level indicated in last year's medium term financial strategy. That is, of course, the key decision in the whole Budget. It is of profound significance that it was that decision, and the Budget constructed around it, that immediately led to a fall in interest rates and the mortgage rate. If one were to ask anyone in industry or business today what single step could be taken which would assist them most in expanding and protecting the jobs of today and providing the jobs of tomorrow, I have no doubt at all that it would be one which would result in a fall in interest rates.
Having taken the central fiscal decisions, the Chancellor had to decide how to distribute the limited amount of largesse that was left to him of about £1 billion. In any Budget there is a certain amount of giving with one hand and taking away with the other—perhaps rather more of that in this Budget than in most—but at the end of the day, on that analysis, there was still only about £1 billion left to play with. That money could, of course, be used to increase spending or to reduce taxes. There are several ways of doing both. All of them are likely to stimulate employment in the short run.
The difference in the extent to which the different measures—increasing expenditure or reducing taxes—would do so is, frankly, not very great. Within the total of only £1 bllion, the differences between the impact on


jobs of the various possiblities are very small indeed. So there is simply no question of one route being remotely open to the Chancellor as the right one for jobs, while the others are not.
As my right hon. and learned Friend the Paymaster General pointed out, public works programmes today are far from being the best way of getting the most jobs for any given expenditure. The question of the level of public works or capital expenditure more generally in the public sector should be decided on merit, not as a means of short term job creation. In crude terms, if one were thinking that way—and it would be the wrong way to think—the way to create most jobs in the short term is to employ people directly in the public sector or indirectly through the use of public money by such means as special employment measures.
If expenditure of that kind could make a huge difference to the level of employment, it might be tempting to decide to spend the limited sum of £1 billion on that basis. But with that sort of money, it cannot possibly make any substantial difference. Therefore, it would be wrong to decide what to do on such a short term basis. The decision should be made on longer term structural grounds—on the basis of not of what would give the the most immediate boost, which would be dissipated after a short while, but of what would most help to change the structure of the economy in a way that would make it more productive, more innovative, and more likely to grow in a sustained and sustainable way.
It is because reductions in the burden of taxation are likely to have that longer term structural effect that I think the Chancellor was right to spend about £100 million on specific employment measures and the rest on reductions in taxation. The case for tax cuts on those grounds was immensely persuasively made by my right hon. Friend the Member for Guildford (Mr. Howell) earlier in this debate.
The question then arises: what sort of tax cuts should they be? Should they be personal or corporate, direct or indirect? For some time I have believed that the first priority should be to cut personal taxation but to increase allowances over and above indexation to the greatest possible extent. That gives most help to those who need it most and takes many of them out of tax altogether. It helps most in the poverty and unemployment traps. But in my view the argument in favour of proceeding in that direction became substantially less strong in the face of the reforms of my right hon. Friend the Secretary of State for Social Services. They make a significant difference to the choice between increasing allowances and reducing the basic rate of income tax. Therefore, I became less resolute in my preference for increasing allowances.
That preference was further diminished when I heard the Chancellor announce that at the higher rate he was not indexing thresholds in line with inflation. Indeed, the top rate threshold has been increased by less than half the amount that full indexation would prescribe. In the past, all the thresholds have normally gone up proportionately. The failure to follow that principle this year has not been sufficiently noted. It makes an important difference to the argument and to the impact of the cut in the basic rate of income tax.
I must confess that I was only finally converted to full acceptance that it was right to reduce the rate rather than to increase allowances further when I heard my right hon.

Friend the Chief Secretary to the Treasury explain last Wednesday that it was the turn this year—I stress "this year"—of those within the income ranges of £5,000 to £20,000 to benefit and, above all, when I heard him say that in choosing to make a reduction in the basic rate this year the Government are not saying that basic reductions are in some sense better than threshold increases. The proper choice between the two will, I assume, have to be reconsidered afresh next year.
However, I am afraid that if the Government's task of persuasion has been effective as far as I am concerned on this point, I have more difficulty with what has been said in the Budget and with what appears in the Red Book about monetary policy. In the very short term, any weakness in monetary policy may be masked by the overall support that is currently rightly being given to the Government's general economic stance, but that should not be a pretext for ignoring what seems to me to be a real problem that is potentially storing up trouble for the future.
The Red Book says that there is some scope for varying the balance between fiscal and monetary policy. I cannot help feeling that fiscal policy is having to do most of the work this year. I find what is said about monetary policy lapidary, tentative and not wholly convincing. That is not entirely the Chancellor's fault. We have simply not found a monetary aggregate that is credible as a target to seek to follow.
To select instead a couple of aggregates and then to say that the exchange rate will also be taken into account, without saying how in any very cogent way, is hardly likely to produce a convincing monetary policy, especially if one of the targets has proved as broken a reed as sterling M3. As recently as in last year's medium-term financial strategy the target range for sterling M3 was set at 4 to 8 per cent., but it has been rightly felt that the failure to meet that target did not mean that monetary policy has been too lax. Other indications show that it was not.
What does one do about sterling M3? The answer given is that sterling M3 does not behave as it used to behave because of the rapid fall in velocity in recent years. Because of that, a new target for 1986–87 has been set at 11 to 15 per cent.—a near trebling of the lower end of the range and a near doubling of the upper end of the range —compared with what was set for this year only 12 months ago.

Dr. Jeremy Bray: Is the right hon. and learned Gentleman seriously maintaining that monetary policy is lax when we have the highest real interest rates in the world by 6 per cent.?

Mr. Brittan: No, I am not. That is exactly what I have said. I am dealing with a problem, which still exists, of how one handles, sets and determines what monetary policy should be. I was going on to say that if one looks at chart 2.3 in the Red Book, which shows the velocity of the monetary aggregates, it is clear that the velocity has been falling fairly steadily since 1980, and there has certainly not been an acceleration of that fall in the last year to justify so huge an increase in the target range. It is difficult to avoid the conclusion that the target range has been chosen on the basis of what is attainable rather than what has any real significance in terms of the assessment of the appropriate degree of tightness of the monetary policy. That is the answer to the hon. Gentleman.
The lack of real belief in sterling M3 is borne out by two further points. First, the Red Book rather plaintively tells us that
the high proportion of interest bearing deposits within broad money has meant that the immediate response of broad liquidity aggregates to changes in short term interest rates is highly uncertain.
In ordinary language, if sterling M3 looks as if it is going wrong, we have no idea whether our only known instrument of affecting it, now that we have given up overfunding, will put it right.
Secondly, it is significant that no target or illustrative range for sterling M3 is given beyond 1986–87, although figures for GDP and MO are given for a further three years up to and including 1989–90. The reality is that, with monetary aggregates in disrepute, monetary policy has increasingly been dependent on exchange rates, but the policy has not been clearly spelt out. The difficulty—and I hope to show why it has practical importance—is that, if monetary policy cannot be spelt out convincingly, the markets are uncertain, the authorities may have to react, and the effect is that interest rates are likely to be higher than they would otherwise be and probably change more often.
Excessive interest rates and frequent changes in them are damaging to industry. Therefore, this is not some theoretical or esoteric argument. If credible and comprehensive monetary policy is likely to lead to lower interest rates, that is a valuable prize for which we ought to strive.
I do not believe that there is any monetary target currently in sight that will provide a more worthy lodestar. The way to achieve a convincing monetary policy is through the exchange rate route. Theoretically, it would be possible to choose our own free standing exchange rate target. In my view, it would be artificial to do so, because for so long it has been Government policy to join the exchange rate mechanism of the European monetary system when the time is right. In the past I have not thought that the time was right for that.
Rightly or wrongly, the pound has been regarded as a petro-currency and it was thought that movements in the price of oil would be likely to push the pound in the opposite direction from the currency of the other European countries which are not oil producers. It was said that our entry would be destabilising for the European monetary system and difficult for us to sustain. It is said, and I agree, that there would be nothing worse than frequent realignment and rushing over to Brussels at times of crisis.
Recent events have completely changed that position. At last the world believes what the Treasury has been shouting from the tree tops for years—that the role of oil in our economy is not nearly as great as has been universally assumed. In recent years, there have been at least eight studies of the impact of oil prices on the exchange rate. Taken together they seem to show that a 10 per cent. change in oil prices leads to a 3 to 5 per cent. change in the effective rate. Therefore, a 50 per cent. change in oil prices ought to have been expected to lead to a 15 to 25 per cent. change in the exchange rate. In fact, in recent months the price of oil has fallen by nearly 50 per cent., but the effective exchange rate has fallen by only about 5 per cent. On top of that, the current rate against the deutschmark is competitive for our exporters while the dollar rate is high enough not to be inflationary.
Therefore, I conclude that the moment is approaching very rapidly—if it has not already arrived—when we should fully join the European monetary system. I understand the risks of pressure on the pound on political grounds — for example, impending elections which momentarily seem likely to be won by parties other than the Conservative party. However, the risk of that is no greater inside rather than outside the European monetary system. We would have to take corrective action in any event. In the European monetary system there would still be the retention of freedom of action in genuinely exceptional circumstances.

Mr. Robert Sheldon: Has the right hon. and learned Gentleman taken account of the fact that at present the one dominant currency in the European monetary system is the deutschmark? With the introduction of Britain, there would be two powerful currencies operating on slightly different bases, and that could lead to a certain amount of instability.

Mr. Brittan: That was one of my anxieties. However, for the reason that I have just given, I think that recent developments have removed that anxiety and the advantage of once again having a credible monetary policy would be very great. Such a monetary policy would be a tight one. It would reinforce other pressures on industry not to be lax on the pay front. It is clear that such laxness would not lead to the lowering of the exchange rate to bail out industry in order to restore competitiveness in the short term. Industry would have to play its part in the tight for jobs by resisting excessive pay claims. In that way monetary policy would help the battle against unemployment, as would the lower interest rates which would be likely to come about as a result.

Mr. Budgen: rose—

Mr. Brittan: I hope that my hon. Friend will excuse me, but I am coming to the end of my remarks.
I hope that the hesitancy that I detect in the current statement of monetary policy is caused by the fact that what we are seeing is only a provisional statement and that it will soon be superseded by an approach of the kind that I suggest. I hasten to make it clear that I have no specific reasons for believing that is so. I am expressing a hope. When that happens, the fiscal system and the constructive ingenuity of the Budget which has been so warmly applauded will be complemented by a monetary policy that reinforces the Government's efforts to promote the only kind of economic advance that will endure—an advance that is soundly based and firmly buttressed.

Mr. J. Enoch Powell: I do not share what appears to be the belief of the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) that if we can find a satisfactory form of monetary measurement we can therefore find the means of manipulating it. As to the advantages of having a fixed exchange rate, I shall arrive at an opposite conclusion from him.
Under the pressure of time, however, I want to restrict myself almost exclusively to one economic phenomenon—the balance of payments. The balance of payments is a very amusing toy to play with. All sorts of arithmetical games can be played with it with great satisfaction and occasionally with some entertainment and instruction. The balance of payments has one delightful quality—that is


that it balances, is bound to balance, and always must balance, because it is merely a statement of the different motivations with which the same transactions take place within a given period of time. Hence the astonishing conclusion, which people find difficult to absorb, that if one has a surplus on current account, one must therefore inevitably have an equal and opposite deficit on capital account. That is to say—to put it crudely—one must be exporting capital to the value of whatever is the surplus on the balance of payments in which one happens to be rejoicing.
On the subject of the balance of payments, there are two questions that I want to address specifically, one to the Treasury Front Bench and the other to the Opposition Front Bench. It is, of course, a consequence of having a current surplus on the balance of payments that one is exporting capital; and no doubt a considerable factor in the growth of our overseas assets is due to the surplus which we have enjoyed in our trading accounts of the past six years.
The Chancellor of the Exchequer said in his Budget speech:
Our net overseas assets have, in fact, risen more than sevenfold from £12 billion at the end of 1979 to almost £90 billion at the end of last year."—[Official Report, 18 March 1986; Vol. 94, c. 168.]
There is an interesting feature about that statistic. If one totals up our current account surpluses of the past six or seven years, one will not find that they come to anything near the difference between £12 billion and £90 billion. The deduction from this must be that a massive factor in the increase is reinvestment abroad of the profits earned upon overseas investments owned by residents of this country.
The question I want to put to the Opposition Front Bench is this. I understand that it is part of their policy that they will restore control over capital movements. I want to know three things, though essentially they are all part of the same question. First, would they seek to prevent the export of capital from this country? Secondly, would they finish off the job by attempting to secure the repatriation of profits from investments abroad, and thus remove the other factor which was present in the increase to which the Chancellor drew attention? The third but perhaps most important question is this: do the Opposition realise what the effect of that would be upon the balance of payments?
There seems to be the notion that a surplus on our balance of payments is an expendable item, which we are free to invest either in this country or abroad. There is, in fact, no such possibility, for if we do not send that capital abroad we cannot, by definition, have a current surplus on our balance of payments.
Now, although, as I said earlier, the balance of payments is an amusing contraption in an arithmetical sense, in a real sense it is highly complex. We do not really understand the interaction of the various component parts of that balance. Let me take a crude example. We do not know what would be the result of a given increase in exports; do not know whether that would result in an equal increase in our current payments surplus or whether there would be some adjustment in other parts of the account. In particular, we do not know—here I come very much

into the real world—how far our experience with the balance of payments has been related to our experience in unemployment.
In Britain today we are meeting with our exports the cost of acquiring all that we find it advantageous to acquire from the outside world, and still are earning a very substantial surplus of payments year in and year out, a surplus that the Chancellor expects to continue. There is a plausible case to be made that that factor—that changeover of the United Kingdom economy from persistent deficit to persistent surplus—may be not unconnected with our difficulty in dealing with the apparently intractable phenomenon of a high statistical level of unemployment, though there are obviously many other factors that also feed into it.
Therefore, it would be right for the Opposition to think—I hope that they can bring the House into their counsels in this matter—about what they intend to do about capital transactions between this country and the outside world. Do they intend to control them, or aim at reducing them to zero? Do they intend to secure the repatriation of the capital that is reinvested abroad? What effect do they think that will have upon the balance of payments, and, through the balance of payments, upon the economy of the country?
Having given the Opposition Front Bench something to think about, I hope, for it is a serious issue, I now refer to the Chancellor of the Exchequer.

Sir Peter Tapsell: I have heard the right hon. Gentleman's interesting analysis of the balance of payments many times over the years, but I have never been wholly convinced by it. How, for instance, does he square his analysis with the Japanese experience? For many years the Japanese have combined a large surplus on their balance of payments with full employment at home, but have not always found it necessary to export large quantities of capital. How does the right hon. Gentleman relate that to his analysis?

Mr. Powell: I am sure that the Japanese have found it possible to combine a surplus on their current account with high employment at home. Different economies, at different stages of development and in different circumstances, will differ in that respect. What I cannot believe is that the Japanese have succeeded in achieving in one and the same year a surplus on current account and also a surplus on capital account, which means importing capital at the same time. In fact, they have been buying assets abroad—[HON. MEMBERS: "Hear, hear."] Hon. Members are with me on that—and that is what has been enabling the Japanese to maintain their continuing large surplus on current account, which appears, although unaccountably to me, to cause so much anxiety.

Mr. Robert Sheldon: Has the right hon. Gentleman taken into account the possibility of industrialisation leading to an increase in the £74 billion of imports that we bring into the country? That could be raw materials, capital goods and such things. Only a 5 per cent. increase would wipe out our balance of payments surplus.

Mr. Powell: I follow the right hon. Gentleman entirely in that I do not think that it is easy to quantify or predict the result of changing a given factor in the balance of payments analysis. Some of the factors which, in


themselves, are inherently negative may turn out, in their repercussions and indirect effects, to be positive overall. To that extent, I agree with the right hon. Gentleman.
I now come to the point that I wish to put to the Chancellor of the Exchequer. He said that British industry has the
opportunity both to increase its exports and to reduce import penetration in the home market."—[Official Report, 18 March 1986; Vol. 94, c. 169.]
I want to ask him what he thinks the consequences will be if that exhortation, hope or prayer on his part is followed by British industry.
In so far as exports are increased and import penetration in the home market is reduced, no doubt the current account surplus on our overall balance of payments will, other things being equal, be that much greater — we shall have an intensification of the phenomenon which we have experienced in the past six years. Is that what the Chancellor aims at? Is that what he hopes for? What is his analysis of the economic consequences—the consequences in terms, first, of the impact on the balance of payments, and, secondly, the impact upon the economy of that impact on the balance of payments?
I come in haste to the matter with which the right hon. and learned Member for Richmond, Yorks was dealing—control of the exchange rate. The balance of payments will operate inexorably, whether or not one messes around with the exchange rate. With an exchange rate entirely free to move, with which the Bank of England is not playing any games, still the inexorable logic of the balance of payments will apply. But if one decides upon a fixed exchange rate policy —or an aligned exchange rate, which is effectively another version of the same thing —then, in addition to everything else, one is deciding to add a further factor, namely, the level of the exchange rate, and bring that into the play of forces which determine the composition of the balance of payments.
If one decides to fix the exchange rate, one does so at one's own expense, in two ways: to keep the rate down one manufactures one's own currency and sells it; to push the rate up one borrows other people's currencies and sells that. It is a simple and rather hair-raising game, is rigging the exchange rate. In the end the cost always recoils on the country which does it—either by the consequences of providing currency of its own in order to depress the rate, or by the consequences of the international debt incurred in operations to force the exchange rate up.
The Prime Minister made a sage observation—indeed, it might have been a deep observation—when, responding to a supplementary of mine, she said, referring to the suggestion that we should tie our exchange rate to a norm not within our own control, that had the Government listened to the suggestions earlier
we would have found ourselves in some difficulty in view of the fluctuation in exchange rates which inevitably comes through having a currency rather different from those in the rest of Europe."—[Official Report, 6 March 1986; Vol. 93, c. 444.]
The right hon. and learned Member for Richmond, Yorks evidently believes that we have walked out of history. He believes that we have left behind us the period when factors which none of us foresaw, not years before, but only a few weeks before, could alter the balance of supply and demand for sterling. For myself, I cannot believe that the change in economic variables throughout the world which comes home to roost in terms of a movement of the sterling exchange rate lies behind us once and for all and that therefore it would now be painless to

attach ourselves to an external norm. I believe that we would still find ourselves paying dearly to maintain that norm, and ultimately at our own cost.
The right hon. and learned Gentleman is under an illusion when he imagines that the stop-go that would result would be an effective measure against inflation. It is true that it has been used in terrorem by Chancellors of the Exchequer. They threatened the economy, which they were themselves inflating, chat if it did not behave itself, there would be a balance of payments crisis; but still inflation continued and still the balance of payments crisis had to be met by sudden and sharp adjustments of the rate of exchange.
I agree rather with the right hon. and learned Gentleman's fundamental proposition that the Chancellor of the Exchequer and this Administration in general have, by control of public sector borrowing, been utilising the only instrument by which money supply can be increased or controlled or by which inflation can be—to use the rather absurd metaphor—conquered. We would not get any nearer to that by applying the self-punishing mechanism of an externally fixed exchange rate, which would have to be fed in along with all the other factors in the balance of payments.
So I hope that the Government will reflect long and hard upon the philosophy of the Prime Minister's reply, and that we shall continue to enjoy what have proved to be the lasting advantages of an exchange rate which tells us the truth about the worldwide supply and demand for our currency. At least we can do without that additional factor in the already difficult and puzzling make-up of the balance of payments about which both from the Chancellor of the Exchequer and eventually, no doubt after an appropriate period of reflection, from Her Majesty's Opposition I look forward to further enlightenment.

Sir William Clark: The right hon. Member for South Down (Mr. Powell) asked the Opposition Front Bench about the repatriation of capital. British pension funds have already been threatened that unless they repatriate some of their capital invested abroad the fiscal advantage will be withdrawn from them. The Opposition policy is clear.
The right hon. Gentleman mentioned Japan. He did not mention an additional advantage enjoyed by Japan over many years—its small defence budget. It competes with other economies with defence expenditures amounting to an appreciable amount of GDP.
I think that the Budget is clever and far-sighted. It is not a Budget just for tomorrow. The Chancellor has little room for manoeuvre. He has said that the oil factor in our economy is merely 5 per cent. and that the buoyancy of the other 95 per cent. is real. That is borne out in the figures and the Treasury receipts in January which were about £4·5 billion against a forecast of about £2 billion.
The buoyancy in the economy was too conservatively projected in the Budget last year. As a consequence, the Chancellor had some flexibility, albeit only about £1 billion. He has relieved taxation by that amount. That confounds the doom and gloom prophets. I know that Opposition Members think that this is old hat, but productivity, even in manufacturing, is increasing. Growth in the past five or six years has been sustained. Output, productivity and investment in manufacturing are increasing.


We should stop talking down the economy. Our economy is extremely buoyant. Ours is not a petrocurrency. Opposition Members do the country a disservice in always talking down our economy.
We are accused of wasting oil revenues. Over the years we have received about £50 billion in oil revenues, but, as the right hon. Member for South Down reminded us, our overseas assets have increased by about £78 billion, from £12 billion to £90 billion. That must be good for the future, whether we invest in dividends or whatever. Opposition Members do not realise that if one invests abroad one can look forward to the dividend, but that in many cases the only way to penetrate the overseas market is to acquire subsidiaries. That has certainly happened in America and in Europe. When people question capital going out of the country they must realise that many other countries such as America and Japan invest here. If we become isolationist and decide not to invest abroad, we shall suffer reciprocity.
We should not forget the background to the Budget. Inflation is coming down. People can plan with far more certainty. Inflation was 26 per cent, today it is just over 5 per cent., and it is bound to come down to about 3 or 3·5 per cent. Any increase in employment will be retarded by high wage demands. I hope that industry realises that.
At one time the CBI appeared to be concerned only with the need to reduce interest rates. The one point drop that we have recently enjoyed is excellent and it will give industry a boost of about £250 million, but a one point drop in wage rates would give industry a boost of £1,000 million. That is how we shall secure more research and development and more jobs, and that is why it is essential to keep down wage demands.
I am sure that everyone welcomes the measures in the Budget to improve training. In addition, we have the loan guarantee scheme, the business expansion scheme and the community programme.
I welcome the suggestion that wages should be tied to profitability. My right hon. Friend the Chancellor of the Duchy of Lancaster drew attention to the fact that the long-term unemployed are being interviewed over three, four or five days with a view to their joining or forming job clubs. A few pilot schemes throughout the country have been successful and I understand from my right hon. and noble Friend the Secretary of State for Employment that they are to be extended generally. It is interesting to note that there has been some deregistering by the unemployed in some areas where clubs have been formed or introduced.
There are 3·2 million who are unemployed and that is disastrous. I hope that the House will not think that I am trying to denigrate the importance that is attached to reducing unemployment. However, we should ascertain how many of the 3·2 million are looking actively for work. We all know that some have taken early retirement and are not looking for work but are registered as unemployed. Some married women who were in employment are registered as unemployed but are not looking actively for work. If we have 3·2 million drawing benefit, I accept that unemployment is far too high—we must ascertain how many are looking actively for work.

Mr. Martin Flannery: The hon. Gentleman talks about inflation being reduced, but

he has not said that unemployment is increasing massively. It is useless to talk to the unemployed, who expect unemployment to increase, as though everything in the garden is glorious and that nothing is wrong. Is it not a fact that the unemployed have been taken out of a sector where they were able to buy products and that if they returned to it they would be able to buy more products? The spiral of unemployment makes things worse all the time. I ask the hon. Gentleman to accept that reality.

Sir William Clark: I cannot understand the hon. Gentleman's logic.

Mr. Flannery: Of course the hon. Gentleman cannot.

Sir William Clark: I should have said that I cannot understand the logicality of the hon. Gentleman's statement. Surely the reduction of inflation is the greatest boon to everyone, whether he or she is on a small income or a large one. It must be better for inflation to decrease rather than increase. Surely that is obvious to anyone.
My right hon. Friend the Chancellor of the Exchequer told us in his Budget statement that the surplus assets in pension funds will be taxed at 40 per cent. I do not object to that, but I am slightly concerned that the Government Actuary will intervene if the assets of a pension fund are only 5 per cent. more than the fund's liabilities. I am not certain that a surplus of 5 per cent. is a sufficiently high one for the introduction of taxation. I do not agree that the pension funds should hold massive surpluses, but we must not undermine the integrity or the financial stability of occupational pension funds. If the stock market turns down and securities decline, some of the pension funds with a 5 per cent. surplus may be in trouble.
The 11 million occupational pensioners should be aware of what the Opposition have in store for them. As I understand it, a Labour Government would force the institutions—the pension funds—to invest in a national investment bank. The House will recall that the right hon. and learned Member for Monklands, East (Mr. Smith) talked about a national investment bank and investment, but he did not say from where its funds would come. I believe that a good part of the funds will be forced from occupational pension schemes. I have no objection to forced investment if I am satisfied that the person who is to invest my money will do so wisely, but unfortunately the record of most public investment is not all that good. If the funds of the 11 million are to be diverted into a national investment bank and reinvested—no doubt into lame ducks to create jobs, for example—pensioners and their pensions will be put at risk.
The Opposition have threatened that if a Labour Government are returned they will repurchase all the shares that have been bought under our privatisation measures. Of course, a Labour Government would not repurchase the shares that have been bought by small investors. We know that 2 million small investors bought British Telecom shares and we know also that a Labour Government would not wish to upset them. Presumably a Labour Government would repurchase the shares that have been bought by the institutions. Apparently, they will buy them at the same price that the institutions paid for them initially. No allowance will be made for inflation between purchase and repurchase. Similarly, there will be no allowance for any capital growth that has taken place


between purchase and repurchase. Again, this will put at risk the pensions of the 11 million occupational pensioners.
I say to occupational pensioners that they should beware of any Labour Government. I have explained what the Opposition intend to do with their money and their future.
My right hon. Friend the Chancellor of the Exchequer knows that I am in slight disagreement with him on how we should relieve the burden of taxation. The reduction of the standard rate of tax by 1p, from 30p to 29p, was excellent, and the same can be said of the indexation of the tax thresholds. However, under the new indexation, a married man will start paying tax as soon as he has earned £70 a week. Surely that figure is far too low when the national average wage is slightly more than £180 a week. A priority for any Chancellor of the Exchequer should be to increase thresholds so that half the national average wage becomes the tax threshold for a married man. When that has been achieved, let us deal with the standard rate tax.
The Budget is a continuation of previous measures in that it encourages wider share ownership and the Government's housing policy, which has led to more than 60 per cent. of houses being owner-occupied. There are over 4 million small shareholders, and that number will increase with the introduction of PEP, which I warmly welcome. More help will be given to charities and some of the strain will be taken from the public purse in looking after people through the various charities.
My right hon. Friend the Chancellor of the Exchequer should be congratulated on the Budget. The exchange rate has been abolished and so has the investment surcharge, along with the tax on jobs which was imposed by the Labour Government in the form of the national insurance surcharge. Development land tax has been abolished and it is time that my right hon. Friend abolished the lifetime gifts tax. As others have said, it is an ingenious Budget. It is also a prudent Budget and it will be welcomed by most of the British people. Furthermore, it is a cautious Budget. I am sure that all my right hon. and hon. Friends look forward to next year's Budget.

Mr. David Penhaligon: I am sure that many hon. Members would agree with the hon. Member for Croydon, South (Sir W. Clark) that one of the better aspects of the Budget concerned the changes for charities. I welcome those changes, and I am not afraid to say that. However, I take issue with the hon. Member for Croydon, South when he implies that charities could substantially help to alleviate some of the enormous social problems in our country. Charities can set standards, have new ideas and manoeuvre a fresh approach to many issues, but, relative to the global problem regarding the relief that they bring for the many people who need help, their contribution can never be that massive. However, I am willing to agree, enthusiastically, that we should encourage individuals to give money to the charity of their choice and to do that through fiscal measures.
The first major point that I should like to make has already been mentioned—the problem that the economy is currently experiencing regarding unit labour costs. The Chancellor identified that problem during his Budget statement, the right hon. Member for Chingford (Mr. Tebbit) at least managed to make passing reference to it,

and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) made substantial reference to that problem and concluded that we should join the EMS.
I have long taken the view—a view held by the alliance—that we should join the EMS, but those who believe that that will solve unit labour cost problems in splendid and wonderful isolation are misled. It is time that the House applied itself more to the problem of unit labour costs than it has done hitherto. In 1979 we were told that the solution was simple—we should control the money supply. There are few in the House now, even among its original, enthusiastic advocates, who would argue for that idea.
At Budget time it is fair to ask the Government, if they see unit labour costs as one of the great problems affecting the economy—and I would concur with that belief—and if they believed originally that control of the money supply was the solution, to tell us what went wrong with the original policy or what they wish to put in its place. The alliance firmly believes that, unless we can get unit labour costs under reasonable control relative to our competitors, there is no prospect of long-term economic recovery. I am not certain that many in the Treasury would disagree with that diagnosis.
It is interesting to analyse the experience of the average British industrial worker compared with that of the average German industrial worker over the past 20 years. I have been trying to find the precise answer to the following question but have not been successful, although I can give an approximate answer: which group of workers, German industrial or British industrial has, in each year received the largest pay increase? The answer would appear to be something like 16:4 or maybe 15:5 in favour of the British worker. It is certain that in most of the past 20 years the German industrial worker has received a substantially smaller increase in the monetary value of his pay than his British counterpart. Yet, when one analyses the changes in living standards that have taken place over that time, it shows how lunatic and nonsensical is the obsession with an individual's yearly pay increase.
We must undertake a major propaganda effort to explain that point and make it more widely known. Indeed, as I sit on the alliance Benches and listen to some of the comments from the Labour Benches, it is apparent that we must do a great deal of work on that matter in the House. If we cannot get industrial pay settlements down to a little over the level of inflation, there is no alternative economic scenario which will get people back to work and rebuild our manufacturing base, for which so many people in this House desperately wish.
The Government have occasionally applied their mind to wages. However, they have taken on the easy targets—the ones that least needed attention. There has been much legislation to reduce the pay of the very lowest paid in Britain. The people creating difficulty in that area are not the ones who immediately flash to mind. The Government have put a lot of effort into taking on an easy target because they wish to duck a far more difficult one. It is not the low paid who are causing the problems; rather it is us—and I use the word "us" in a collective sense to describe those of us in the medium to well paid category. We must somehow persuade people in that category to accept pay rises of rather less than they have been getting over the years if we wish to re-establish our employment record and manufacturing base.
Even more than that—although this is not absolutely fundamental to the Budget statement, there is an implication for it—we have seen the Government's determined and successful attempt to keep down many of the pay settlements in what I describe in the broadest sense as the Government sector. That is causing a potential explosion of resentment which is gradually building up beneath the Government. It is an explosion of demand and a feeling of outrage which I suspect someone at some time will have to pay for.
Much of the Government's progress on inflation is undoubtedly true and real, and the alliance welcomes that, but much is illusory and not necessarily long-term. It is worth pointing out, when the figures comparing this decade with the last decade are so freely given across the Floor of the House, that at this moment, after all the agony that this country has been through, as far as I am aware, there is only one industrially-based nation which can reasonably be compared to Britain. Only Italy has a higher level of inflation than Great Britain. Italy has an inflation rate two or three points higher than ours. All the other nations have lower inflation levels—not much lower, it is true, but it is worth stressing that. Despite the effort, sacrifices and enormous level of unemployment, so far as I am aware, only one country has a higher level of inflation than ours.

Mr. Ian Gow: Would the hon. Gentleman care to consider Greece, Portugal and Spain, just to mention three other countries, when he makes those statements?

Mr. Penhaligon: I did say that I was comparing nations roughly equivalent to ourselves. I did not realise that the Government believe that the British economy is now in such a state that we should compare ourselves with Portugal, Spain and Greece. If that is the standard adopted by the hon. Member for Eastbourne (Mr. Gow), so be it. However, when comparing ourselves with France, Germany, Holland, Canada, the United States and nearly all the OECD countries with a large manufacturing base, my previous statement is true. If I need to be corrected, there will be opportunities for that to be done.
The alliance's conclusion—which is not popular and may not attract votes but which is important and fundamental and one which we will argue for with vigour—is that there must be some kind of incomes policy within the economy. That policy should preferably be built on the back of consent; if not, on the back of a mandate. In the final analysis, it should be encouraged to work through statutory fiscal pressures.
My next point concerns the penny off income tax. It has been interesting listening to hon. Members speaking about that. In reality, the Chancellor, having adjusted this and that, discovered that he had about £1 billion to spend. That is his judgment. The alliance took another view in the alternative submission that we put to the House, which was published before the Budget and which we were willing to put through the various economic models. That was a brave and unusual thing for an Opposition party to do. It is certainly something that the Labour Front Bench would not dare to do as the computer is likely to say "submit" or "surrender" before it gets through the first six months of the Labour party's proposals. However, we are willing to put our alternative submission to the test. We believe that

we could run a slightly bigger PSBR. I do not wish to discuss that point at present. I should just like to accept the Chancellor's analysis of his £1 billion to spend. One can run a PSBR bigger than that, but let us simply accept the Chancellor's statement about that £1 billion.
In current circumstances, on what would the House collectively wish to spend that £1 billion? That is the decision that the Chancellor had to make. The alliance, in its submission, said that it thought that one of the most effective ways of using that money would be to relieve poverty, create jobs and give the manufacturing base some kind of boost. To do that the money could be used to reduce the employers' national insurance contributions. We accept that there are alternatives. One could have argued that some of the money should go to alleviate the poverty that has undoubtedly increased in our society over the past few years, particularly among the unemployed and the retired. One could have argued that some of the money should be used to build up and repair the infrastructure—houses, roads, sewers or whatever. The alliance argued for a combination of the three in its submission.
The Government decided not to do any of those things. They decided that poverty, jobs and the infrastructure were not important. They chose to spend that miserable £1 billion in the least effective way. They decided to reduce income tax by 1p in the pound rather than to rebuild our industry and infrastructure and relieve poverty.
We know from knocking on doors during election campaigns that few constituents would offer to pay more tax. I am constantly amazed when politicians argue to the contrary. But we believe that the 1p in the pound off income tax is a mistake, and to show that we take that seriously we shall seek to divide the House on that matter tonight. We shall vote against that reduction in income tax tonight because we believe that there are other less selfish ways in which that money could be used.

The Financial Secretary to the Treasury (Mr. John Moore): This is obviously an important issue for the hon. Gentleman's party. Why was not income tax mentioned in the budgetary statement, "Jobs and competitiveness," which his party issued in advance of the Budget?

Mr. Penhaligon: Income tax is mentioned. We said—the Minister will be unfair not to recognise this—that we would valorise tax thresholds and tax levels. If the Minister does not know what that means, he has not read far enough. We made it clear that we would increase thresholds in line with inflation, but—and we were not trying to duck it, deny it or wriggle our way out of it—that we must face the economic reality. We would not have reduced income tax by 1p in the pound in the current situation.
We would not have exempted lifetime gifts from tax altogether. It is an obscenity beyond belief that, as a result of the budget, a parent during his lifetime can give a child £10 million and that massive transfer of wealth would not incur one farthing of tax. Previously, the Chancellor would have taken £3 million.
Politically, the Government will get away with that change because most people do not believe that there are people who have £10 million to give to their children. But those who have been Members of the House for a year or two know jolly well that there are many hon. Members who could afford that. With all the poverty and housing problems that we see, it is staggering that, of all the people


the Treasury could relieve, it has chosen to relieve people with that sort of wealth. We on this Bench do not argue, and never have, that levels of tax should be such that they represent confiscation. The previous level was one third. Plus or minus a bit, that is about right. Frankly, in all decency, someone who has £10 million to give to a child can afford £3 million in tax.

Mr. John Townend: Does not the hon. Gentleman have the problem in his constituency that many other hon. Members have of family businesses being forced to sell out because of capital transfer tax, with the consequent loss of jobs? Does he accept that some of the family businesses that went out of business or sold up in the 1960s and 1970s would have been the seedcorn that would have provided jobs today? Will he at least exempt family businesses?

Mr. Penhaligon: We have not attacked some of the changes in capital transfer tax.
If one takes £10 million—

Sir William Clark: I did not mention £10 million.

Mr. Penhaligon: I know. I am talking about the consequence of the Government's legislation. Farms are the most difficult area in relation to capital transfer tax in areas such as mine. They already have a 50 per cent. exemption on top of the basic rate. A farmer must own a grand-daddy of a farm for it to be worth £10 million, even with the inflated property values that we have today.

Mr. John Townend: £500,000.

Mr. Penhaligon: Oddly enough, one could argue that capital transfer tax started at too low a level at £71,000. That is where it started previously. I have not mentioned the £71,000 level, but I become extremely angry at the net effect of the removal of capital transfer tax from a sum of £10 million.
The lunacy of the Government's position is that the only wealth we now tax is that which is released from its possessor as a result of his unexpected death. No other wealth is taxed. Everybody knows that they will die in the end, and there is plenty of advice that people can take on that. The only people who will pay large-scale capital transfer tax in future are those who die unexpectedly, or, as my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) said, those who trust the Inland Revenue more than they trust their own relatives.

Mr. Moore: I apologise for intervening again, but it is interesting to learn the policies of the hon. Gentleman's party. How does the hon. Gentleman combine what he has been saying at great length about capital transfer tax—I trust that he will seek the opportunity to vote against this Budget resolution in order to put his party's position on the record—with the fact that in the past seven years, since 1978–79, the proportion of taxation taken in capital taxation has increased from 1·4 per cent. to 1·8 per cent. and in real terms the revenue yield has gone up by 30 per cent?

Mr. Penhaligon: The right hon. Gentleman will certainly reduce that this time. I rather suspect that a fair amount of capital has been transferred in the past few years in the belief that the regime could not conceivably become more favourable. It just shows what mistakes people can make. If only they had hung on a bit longer, they would have paid no tax at all.
The Chancellor is clearly in a difficult financial position. He lost £5 billion from oil and he takes no blame

for that. But the Government must be able to stand up and defend why, within the narrow limits for manouevre that they have in this Budget, they have decided to use £1 billion in the way that they have.
Many Conservative Back Benchers, at least on television, attack that change with as much vigour as I do. If there were a secret vote on this among Government Back Benchers, the 1p in the pound reduction in income tax would not receive a majority.

Mr. Michael Heseltine: I share the broad approval that has been extended, not only in the House but widely outside, for my right hon. Friend the Chancellor's Budget statement which has achieved so many of his central economic aims. Obviously, the Government's prime responsibility to secure control over the economy is self-evident. There is no question whatever that on some of the more important aspects of my right hon. Friend's policy he had a good story to tell. The star of the record was the fact that we now look to the prospect of a 3·5 per cent. rate of inflation. Not even the most enthusiastic Government supporters believed that we would reach such levels as quickly as we have. Without the slightest doubt, falling interest rates and rising output and productivity in an economy that is now growing faster than any comparable economy, with the possible exception of that of Japan, are a remarkable achievement.
We should not lose sight of the fact that part of the growth in output, particularly in manufacturing, is a recovery from a low base but that is now rising and it is part of a growing economy on a consistent year-on-year basis. That is a solid and real achievement. My right hon. Friend the Chancellor of the Duchy of Lancaster was right to draw the attention of the House to the fact that much of the credit for our falling inflation goes to the falling levels of raw materials and changing oil prices, but there is a countervailing force which is much to be deplored. The private sector has been given the most incentive-oriented economy that it ever dreamt it would see, but we are speeding up the potential level of inflation with wage settlements running at nearly double the level of inflation. We shall pay the price for that in lost jobs and lost opportunities as it feeds through into the economy.
Recently, we have benefited considerably from the change in the price of imports and of oil but the private sector is undermining benefits which should accrue to the whole national economy. That is to be deplored.
I agree with the hon. Member for Truro (Mr. Penhaligon) that the Government have taken an immensely courageous stand in holding down public sector wage claims for a long time. There is an unhappy contrast between how the public sector has accepted that, with great difficulty and with great stress to the Government, and what is happening in parts of the private sector. Everybody knows that significant real increases in earnings are being achieved by many of those who are in work because pay settlements are so far above the level of inflation. Everybody expected that the steps that the Chancellor would take would lead to a fall in interest rates, but it did not seem self-evident to me that we should further encourage an increase in real living standards for those people by giving them a 1p reduction in the standard rate of income tax.
I was slightly at odds with my right hon. Friend the Chancellor of the Duchy of Lancaster—although I agree


with much of what he said—because he did not give quite the right emphasis to the sale of capital assets to finance current consumption increases which a standard rate reduction in tax would tend to stimulate. There is too little awareness that the capacity to go on selling assets is temporary. If one stimulates consumption on the basis of capital asset realisation, one is losing sight of the long-term need to use those capital asset realisations for capital growth and capital stimulation as opposed to enhanced consumption, which we might find difficult to sustain when the ability to realise more capital assets is diminished.
I strongly commend the Chancellor and his predecessor, my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs, for their consistent efforts to incentivise and stimulate the small business economy. It is impossible to underestimate the scale of present incentives to encourage people to become self-employed, to start their own businesses and to develop those businesses into successful, thriving concerns.
If there is a criticism of previous Governments—there are many, especially of the Labour Government—it is that there was a relatively inflexible economy for far too long. We were not sufficiently innovative and, when the recession came, there was not the wide dispersal of industry and activity which might have protected us from some of the worst excesses of that recession. Recently, however—and this Budget continues the policy—we have created a wide range of incentives which are equal to anything that can be offered anywhere in the world.
I strongly support the Chancellor's determination to build on the philosophical and political strength on which the Government have laid such importance—the spreading of ownership. The property-owning democracy of the 1950s and 1960s, to which the Government have added the enfranchisement of council tenants, has played as decisive a role in changing fundamental attitudes to individual responsibilities as any other single feature of modern society. To extend that into wider share ownership must be the priority. Without the slightest doubt, the Chancellor has taken an important step. I hope that he will accept that it is not the last one. There are other incentives, which could easily be copied from overseas, to give greater thrust to our economy. However, all credit is due to my right hon. Friend for taking that important step in the Budget.
I take issue with the hon. Member for Truro on his attempt to win both ways on the taxation of small family businesses. We quite understand that the principal Opposition party, in its guts, has no sympathy or empathy for the flourishing private sector economy and the private businesses that it creates. It has for generations encouraged the incentivisation that encourages publicly quoted companies to buy up family businesses and thus diminish the provincial power base of the industrial heartlands of Britain.
The tax changes announced by the Chancellor mean that those who create businesses will be able to pass them on to their families or to sell them within the community to which they are important. That is an important part of maintaining the capitalist strength of Britain. Nothing is more harmful, other than nationalisation in which so many

Opposition Members believe, than forcing, by considerable fiscal incentives and high capital taxes, family business, to sell out to publicly quoted companies. That is another step towards the centralisation of wealth. The branch officer takes the place of the entrepreneur in provincial Britain. The Chancellor has taken a courageous step in trying to reverse that trend. The Labour party has no interest in encouraging such a thriving capitalist base.
The Liberal party says that it favours a capitalist base for small people, but the moment a company becomes successful it will obliterate the company's ability to remain in business. That is a classic example of the Liberal party not being prepared to stand up for either side of the political argument. If one genuinely wants capitalism and for it to be a rival to the centralising process of Socialism, one must recognise that small businesses will, in many cases, become large. It is far better to leave the ownership of those businesses where they were created and where they are relied on than to centralise them by taxation or other techniques.
From the privacy of Government discussions, the Chancellor is as familiar with my views as I am. If I have one criticism of his Budget it is that it has a discretion which I would rather see used differently. I am aware of the limited opportunities available to the Chancellor, but I would have preferred him to have encouraged more direct investment in and stimulation of the underlying strengths of the manufacturing base. I do not intend to expand on that today. I accept that he was faced with limited opportunities, but he should have taken a more purposeful stride forward towards the stress areas associated with inner city deprivation.
I do not intend to take the time of the House describing the conditions which are now characteristic of inner city Britain and comparing them with the more prosperous suburbs, rural areas and, especially, the south. I am the first to say that in every constituency—even in mine, which is relatively prosperous — there are pockets of poverty and individual cases of tragedy. Those of us who represent the more prosperous parts of Britain cannot honestly say that there is not an unacceptable gap between what we see in the stress areas of the inner cities and the prosperous parts of Britain. That is recognised in the harsh conditions of the inner city stress areas and throughout the British political community.
We do not need an endless parade of more statistics because the conditions in those areas have an eloquence of their own. The Government, as everyone is aware, inherited rapidly rising unemployment from the last Labour Government. It is extraordinary to listen to the Opposition Front Bench. If it is so easy to deal with the problems of unemployment, why did the Labour Government of the late 1970s find it impossible to reverse the then upward trend? The Government inherited about 1 million unemployed, which was a post-war record. The Labour Government had no idea how to reverse or grapple with the unemployment which was permeating through the entire Western world. If Labour does not recognise that basic part of its inheritance, it will never command the respect of the country.

Mr. D. N. Campbell-Savours: This is not Blackpool.

Mr. Heseltine: People remember that there were no easy solutions when Labour Members sat on the Treasury


Bench. There are no easy solutions today, and there certainly would be none if, by misjudgment, Labour party Members found themselves back on the Treasury Bench.
We should be frank. Although unemployment is unacceptably high, its level has never been seen to be capable of being cured easily or simply by changing the political party in power. The social, fiscal and economic forces of the 20th century have encouraged generations with wealth and discretion to leave the inner cities. They left behind conditions which are increasingly reminiscent of state-dependent pensioner societies. These are the people who have too few personal resources. They tend to be less well educated, elderly and to have no family support. They are the last group in society to whom we can apply the language of self-reliance and a competitive race in which, by their own abilities, they should somehow succeed. They do not have the personal characteristics with which they can fairly be expected to survive in that rather over-simplistic description of life's forces.
The language of self-help when applied to those communities is something of a delusion. There is growing anxiety about the social imbalances and the consequences that flow from them. Those anxieties grew under the previous Government, as under the present one. When the Government came to power, they rightly refused to increase, or even in some cases to sustain, all of the programmes which affected some of those areas. There was absolutely no case for excluding current programmes of local government from the rigours to which the private sector was being subjected by the recession. Nor was there any reason to exclude local government from the appraisals and the insistence upon greater efficiency to which the Government subjected the national Civil Service. There was no case for setting the bureaucracies of local government apart from that long overdue scrutiny of our national performance. If anybody has the slightest doubt about that, he has only to pick up the latest report of the local government Audit Commission to discover that the figures prove that service after service can be provided at a perfectly acceptable level but at significantly lower cost.
There was absolutely no case for suggesting that restrictive practices and over-manning in inner cities should be set apart from the pressures to which British society was subjected. If there is a point to be made on that score, it is that restrictive practices so close to conditions of harshness were even more culpable because they denied resources to those who needed them most.
The Government experimented across a wide range of policy areas. In their experiments with specific urban programmes, the Government, despite the constraints on public expenditure, substantially increased expenditure in real terms on programmes dealing with the worst hardship.
There were two simple objectives. The first was to try to do something to alleviate the conditions of those who had been left behind in stress areas. That does not add up to a whole policy, however; it merely accepts the inevitability of the historic forces that brought such decline about.
The second and essential objective, which the Government developed as policy, was to try to attract back into the stress areas people who would otherwise remain outside. To widen the basis of society in stress areas, we had to try to attract private investment which would have gone—some still is going—to the suburbs, the green-field sites, and the congested south. We recognised that,

to bring a new sense of hope and purpose to stress areas, we had to make them attractive. In a free society, we had to encourage people or to produce incentives to enable people to find a way back—people and investment which would not have chosen to go to those areas otherwise, under any Government.
I shall not list the vast range of grants, programmes and experiments that we conducted, but far and away the most significant and successful is to be found in the east end of London. Through the Urban Development Corporation, we have set about rebuilding the east end of London. It is without doubt one of the most exciting pieces of inner city reclamation in western Europe. Some people talk of the clear divide between the public and the private sector, but I am told that for every £1 of public money going to the east end of London through the UDC, £7 of private money is taking advantage of the opportunity which the public purse created. I saw in The Times on Friday a supplement about the north-west of Britain which refers to a land being born again. Virtually every scheme that is referred to in the supplement was born because the Government took public money into the inner cities to create the environment in which larger sums of private money could be attracted. The Government have shown that the public sector can lead and that, where it leads, the private sector will follow, even into the most deprived and needful areas of the country.
My conclusion is therefore clear. We now know what to do and how to do it. It is clear that, to attract back the strengths that have gone during several decades, we must recognise that there is no substitute for the public leadership which clears the dereliction of the Victorian, the Edwardian and, in some cases, the post-war world. No private sector initiative will do it on its own, because this is a loss-making business. There is no profit to be found. Any of us who is asked to advise the private sector whether it should lose money in such endeavours is bound to advise it not to. We must therefore ask whether we leave these vicious circles of despair to continue on their downward journey or whether we will find the resources to clear the dereliction of the past and to make the areas attractive so that, combining public and private endeavour, we can give people there, and the new ones we can attract, a sense of hope and purpose.
It is said that we cannot throw money at these problems. Just what will we throw at them if it is not money? What else will be used to clear up the dereliction? What else will get rid of the appalling squalor in inner cities? I do not mean that we should spend money indiscriminately, but we have now been experimenting for the whole of the decade. If we have learnt nothing, we should be ashamed of ourselves. I believe, however, that we have learnt the answers that we sought. Once we have the answers, it is our responsibility, if the matter is accorded priority, to extend the experiments commensurate to the scale of the problem. It is only the careful balance between the public and the private sectors which can lead us forward as the appalling conditions demand.
In his Budget statement, my right hon. Friend answered the final question which he would be entitled to put to me—where is the money to come from? He reduced the public sector borrowing requirement by £500 million. I do not believe that there was any case for doing that. We have already pursued with great courage a harsh regime to bring the economy back to a condition of which we can be proud and in which it is growing and there is wealth for dispersal.


Even in the discussions and forecasts of the present Government, it has never been considered necessary to reduce the PSBR by another £500 million. Indeed, I believe that we could have increased the PSBR by £500 million and there would have been no difference in the acclaim with which my right hon. Friend's Budget was greeted.
Even if my right hon. Friend insisted on reducing the PSBR by £500 million, and did not accept that it could have been increased, he still had £1 billion. It therefore becomes a matter of balance. We know what to do. The judgment is about priorities. We can stimulate jobs and wealth and recognise the social imbalance that the tensions that I have described have created by leading the private sector—the builders, the investors, the strong, and the able—back into areas of deprivation.
We have to create an urban environment which attracts people to live and invest in it. The chance to stride forward with conviction this year has sadly been missed, but there will be another. It is the privilege of Chancellors that, after one week's recuperation, they begin on the public expenditure round as a prelude to next year's Budget. The process is circular and remorseless and it has familiar characteristics about it.
I hope that my right hon. Friends not represented in the debate today, who would not be the Chancellor's natural allies but who represent the policies that are of central importance in giving new life to the inner city areas, will recognise that my right hon. Friend the Chancellor is perceived as having a wider discretion in his hands next year. I hope that, as the public expenditure round that is the prelude to next year's Budget gets under way, all those harrowing stories of how we are not going to make it this time and how the City will not take it and how the pressures on borrowing limits or public expenditure targets are such that there is no room for manoeuvre will, in July and August, somehow miraculously turn out to be an ability to produce tax cuts and PSBR reductions when the Chancellor produces his Budget. I hope that, when all that dialogue goes on, given that there is now more flexibility, there will be a recognition that the Government's task is one not only of economic purpose but of securing a wider social and political purpose which is not compatible with the squalor and hopelessness of inner city Britain.

Several Hon. Members: rose—

Mr. Deputy Speaker (Sir Paul Dean): Order. I remind the House that the 10-minute limit on speeches is now in operation, and I appeal for the co-operation of those who are called.

Mr. Robert Sheldon: Any Member who represents a constituency in the north-west or any other region cannot fail to agree with the right hon. Member for Henley (Mr. Heseltine) about the need for some assistance for the disadvantaged areas.
The right hon. and learned Member for Richmond, Yorks (Mr. Brittan) said that the Government's monetary policy was not wholly convincing. That is one way to put it. I found the Chancellor almost insultingly dismissive. His infatuation with money supply seems to have come to

an end and the theory behind the seven lean years has been dissipated. We should rejoice at the conversion of one whose opinions have hitherto been held very strongly.
The Financial Times leader on 21 March said:
The plain fact concealed by this technical bashfulness is that the monetary policy is by now in an almost total mess.
I do not deplore that. The Chancellor is at last being realistic, and I welcome that note of realism.
This is the first Budget in this Parliament that makes no serious attempt to reduce unemployment. The Chancellor now believes that we have passed the point of no return and that high unemployment will never be materially improved before the next election. He therefore thinks that it is better to spend money not on what he considers to be meaningless measures but on conferring benefits on the better-off, in the hope that they who have gained from the Government might express their gratitude at the next election.
So it is that there remain, and will continue to remain, more favoured parts of the country and more favoured sectors of our national life. It must be emphasised, because this is the cause of the discontent and anger in the north and the other regions, that preference is shown to the south and the City of London, and that this preference is an artificial and Government-made preference due wholly to their policies of a high pound, high interest rates and a contempt for any industrial policy.
My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) put it well, when he said that the high FT index leads to short-term profits to prevent takeover bids coming in, as unwelcome as they are. So we sacrifice the long-term investment and expansion for the short-term profits that are a direct consequence of the actions of the City of London. Such thinking lies behind the paucity even of sops to the unemployed. We have had statistical tricks and deceptions designed to delude us into believing what is unbelievable—that unemployment is not worsening.
It is easy to remove people from the unemployment register on the grounds that they are not really looking for work, as the hon. Member for Croydon, South (Sir W. Clark) pointed out. We know that the higher the levels of unemployment, the more pointless it is for many of the 500,000 unemployed for more than three years to continue the charade of searching for employment. The higher the levels of unemployment, the higher the number of those who genuinely cannot find work and so give up looking for it.
The Chancellor's action on capital transfer tax is one of the most disgraceful parts of the Budget. It is a shameful proposal. The Chancellor has replaced what was a useful tax with a voluntary donation payable only by the miser or the negligent. The principles of the tax were sensible and equitable. The enjoyment of the capital that an individual creates for himself is the right of that individual. It is for him to enjoy the wealth that he has created. The enjoyment of capital by virtue of birth has long been regarded as eminently suitable for high and enforceable taxation. That was the basis of the death duties when they were first introduced, of estate duties and, more recently, of the capital transfer tax.
The approach had been to make enforceable that which had been avoided. Under the Government, the tax has been emasculated, first by the reduction in the rates of tax, particularly on lifetime gifts, and then by the 10-year rule whereby one starts all over again every 10 years. Now, we


are back to a tax made even more optional because of the greater sophistication of the insurance market. The Chancellor will be taxing only those who were improvident or over-cautious in not divesting themselves of their wealth. Those who repent of their lack of foresight and endeavour to make hurried gifts towards the end of their lives will be penalised.
The Chancellor has decided that the period of repentance should be fixed at seven years, but insurance companies are even now gearing themselves to cover the seven-year rule. So sophisticated are the new instruments that will be devised that there will be virtual freedom from capital transfer tax, as it is now, or inheritance tax as it will be called, for those who are even remotely well advised.
The Chancellor of the Exchequer prides himself on abolishing certain taxes and reducing others. He prides himself on abolishing investment income surcharge, development land tax and national insurance surcharge, which was created when circumstances were different. Then there were high levels of employment and demand was overheating, but we now have quite different problems of unemployment and the need to increase subsidies.
The Chancellor prides himself on abolishing the capital transfer tax. He has reduced the higher levels of income tax and he is equivocating about the capital gains tax, which may be the next one for abolition—after all, it now brings in less than stamp duty, which the Chancellor has cut in half. The investment income surcharge abandoned the distinction between earned and unearned income—the right and proper distinction that all previous Governments had accepted. There is a difference. There are costs associated with the earning of income such as travel to work, meals out, clothing and so on. There is also the underlying security of capital compared with the insecurity of employment, particularly now.
The Chancellor also abolished the development land tax, which attempted to tax development values created by the community. Its disappearance is yet another bonus to the wealthy. Truly, the rich have never had it so good.
Like many in the debate, I take issue with the Chancellor on belittling the value of oil to our economy. Rarely has the beneficiary of great good fortune been so contemptuous of that good fortune. Having won the pools, he claims that his success is due to his merit, and because he has squandered the oil revenues on the high exchange rates that damaged our industry, brought in imports and allowed the avoidance of any balance of payment difficulties, there has been postponement of any attempt to rectify our underlying weakness. How does the Chancellor think that France, Germany or Japan would have dealt with large oil revenues? Are they a good thing or a bad thing? They would have transformed their economies, which were good enough even before that.
But, most importantly, the balance of payments has been the constricting aspect of our economy in all the post-war years. It has been a dominant factor in all of those 35 years. Stop-go was due not to overheating but to balance of payments difficulties and the holding of a reserve currency. What would Rab Butler and Reg Maudling have done if, at a stroke, they had found themselves relieved of these balance of payments problems?
Oil is of enormous importance and its price is also important to us. We should have a view about the price that we are able to obtain for our products. We sell oil cheaply because of an ideology. But a trading nation

should not be able to afford an ideology when it comes to something so important to us. Consequently, we should speak to OPEC and should try to get what we can for our assets. Having obtained it, we should put that money to good use in industry, in the deprived areas of our country and in the expansion of our manufacturing base. That is how we should use it, and that is how we should proceed.

Mr. Michael Morris: I should like to use 30 seconds of the 10 minutes allotted to me to comment on the speeches of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and of my right hon. Friend the Member for Henley (Mr. Heseltine). I take much of what my right hon. Friend the Member for Henley said, especially as I have been a leader in one of the deprived inner city areas, but the most successful experiments have been controlled by central Government with central Government money. I believe that he should bear that point in mind. I treat the right hon. Member for Ashton-under-Lyne as a right hon. Friend, but he is a far better Chairman of the Public Accounts Committee than he is a Budget analyst.
The Budget was highly creative. My right hon. Friend the Chancellor has managed to squeeze virtually a quart out of a pint pot. I thank him for his provisions on charities. I need say no more than thank you. It was good work; well done. We have made a good start on the share owning democracy with the personal equity plan proposals, but it is only a start. I also say well done for the 1p cut in the standard rate. Whatever colleagues may feel, all the evidence shows that cutting taxes is the best way of boosting long-term jobs and of reducing unemployment.
I repudiate the idea that tax cuts are in conflict with job creation. Although Government expenditure on subsidised jobs may, and I hope will, lead to short-term results, new jobs that are financially self-supporting in the long term have to satisfy market demand. Tax cuts remain the most effective way of increasing that demand.
I am not sure whether the Budget is stimulative or restrictive. At the end of the debate, perhaps I may be told how my right hon. Friend the Chancellor sees it. For example, there is a PSBR of £7 billion with, in addition, £4·25 billion of public asset sales compared with £2·5 billion last year. An analysis of that would suggest that it is a stimulative Budget. But we have lost £5·5 billion of oil revenues, which have to be allowed for in any calculation. Consequently, in a sense, one could say that it is a restrictive Budget. I am not sure whether it is stimulative or restrictive, and commentators in the City are none too sure either.
I query why my right hon. Friend the Chancellor is so coy about fixed capital expenditure. After all, major items of capital expenditure such as the Channel tunnel, Stansted and all the activities, for example, in the east of London were previously substantially just public sector investment. But now there is a mixture. So my right hon. Friend the Chancellor did his cause a slight disservice in not trumpeting the success of that mixed investment. However, I am slightly worried that if interest rates do not fall they may restrict the growth of future capital investment.
I am also worried about North sea oil. It is fortuitous that most of the rig contracts are on a one to two-year basis, so my right hon. Friend the Chancellor has a little


time in which to make suitable adjustments. Although it was right to have windfall taxes when oil prices were in the high $30, it must be recognised that we are not likely to return to such figures. The marginal cost in the North sea is perhaps $20 a barrel, and even that seems hardly attainable in the near future. In the United States there is an automatic adjustment below $20 a barrel in terms of the removal of windfall taxes. The North sea is important not only to Aberdeen but to a whole plethora of companies in the midlands, and I hope that my right hon. Friend will ensure that the tax element is not too restrictive.
British Leyland has already been mentioned. It is not for me to dwell on who initiated the discussions with General Motors. However, it might be a subject for the PAC to consider. Nevertheless, I am sure that Land Rover should be sold to the management. It is not surprising that that company should have suffered; it has been deprived of investment resources for 12 to 15 years. Leyland Trucks reputedly has the best product line in Europe, while Bedford trucks reputedly has the worst. One might reflect that Leyland could take over Bedford trucks rather than the reverse.
Last year's Budget was a "Budget for jobs." Any job stimulation takes time to work through. I can speak only for the east midlands, which is my part of England, but unemployment in Northampton is now falling to less than 10 per cent. Last Tuesday, I was somewhat dumbfounded to hear the Leader of the Opposition say:
The expansion of the jobs clubs for advice is more a taunt than a support for the unemployed. The Chancellor of the Exchequer, who must be acquainted with the facts, must know that people will regard that as nothing more than an additional opportunity to have a chat and a cup of tea. In some ways that is an advantage in itself, because unemployment can be an extremely lonely condition, but that is about as far as it goes".—[Official Report, 18 March 1986; Vol. 94, c. 186.]
On the following day, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) mixed up the job start allowance scheme and job clubs. It was quite obvious that he did not understand the difference between the two, and had never visited any of the trial areas. It is not good enough for Opposition spokesmen to criticise such new dimensions when they do not even know what they are all about.
There have been 30 experiments on job clubs. One of those experiments is in Northampton. In about six months we have handled well over 100 applicants from among the long-term unemployed, and of those 65 per cent. have found long-term jobs. It is not just a cup of tea and a chat. People have to come on four mornings a week for two weeks. They are given help in how to apply for jobs and are given free telephone calls, mock interviews, help with their curricula vitae, postage facilities, a room with a typewriter and a room with photocopying equipment. Indeed, they are given general help with how to get a job.
The public has a great deal more confidence in a Government who carry out pilot schemes which, when found successful, as the job club has been in Northampton, are then introduced nationally than it has in the Leader of the Opposition or in the Opposition's economic spokesman. Those right hon. Gentlemen do not understand the difference between job clubs and job starts and cannot be bothered to visit them.
This is a creative Budget. We have two more to come in this Parliament in 1987 and 1988 and I look forward to

a 25 pence standard rate of income tax in that time. The economy is growing and inflation is falling, and because of that we will see a considerable reduction in unemployment.

Mr. Doug Hoyle: I must declare an interest as president of ASTMS. That gives me an opportunity to say that we recently won the political fund ballot by a massive majority. That will not bring any joy to the faces of Members on the Government Benches, but it is certainly good news for the Opposition.
The Budget is totally irrelevant and has nothing whatever to do with the problems that are facing us. As has been said several times, despite the drop in oil prices, the Chancellor has suddently found that he has £1 billion to give away. To whom did he give that money? Did he give it to the people who are facing problems, to the poor or to the unemployed? Did he use it for the benefit of manufacturing industry? He did not. He used it to reward those who already have quite a lot of money anyway, to reward the wealthy.
The penny reduction in income tax will benefit those who earn the most. What is the business expansion scheme? It means that the rich can use their dividend windfalls, the rebates from the taxman, to invest or gamble in schemes which are supposedly for small businesses. Even the Chancellor had to admit that a lot of money will go into farmland and development. The hon. Member for Truro (Mr. Penhaligan) talked about the abolition of the tax on lifetime gifts. That scheme is a scandal. What relevance does it have to industrial constituencies like mine in the north? What relevance does it have to the problems of Merseyside, to the north-east, to Scotland or to Wales? What relevance does it have to the impoverished north as against the prosperous south? It has none whatever. It will not begin to solve any problems.
I am sorry that the Chancellor of the Duchy of Lancaster is not here. He introduced the debate in his usual manner of the Chingford charm school. His method is to denigrate his opponents, to be short on facts, to say nothing about Government policy and to present it overall with the manners of a house-trained aardvark. He has not changed at all. His chief topic was inflation. As has been reasonably said, our inflation rate is still higher than the inflation rates of our competitors. It is higher than the rates in Japan, the United States, Canada, France and West Germany. What a price we have had to pay for getting inflation down. We in the north and the unemployed have had to pay that price. Nothing in the Budget will do anything for the unemployed.
The Chancellor missed a great opportunity because he could have used that £1 billion to stimulate employment. He could have used it for public works and to develop our infrastructure. The right hon. Member for Henley (Mr. Heseltine) talked about the inner cities, but regenerating the inner cities means far more than giving Liverpool a garden centre. It is about building houses which the council in Liverpool has been trying hard to do in face of all the restrictions. It is about building the roads and the docks that we need and about building schools and hospitals. Schemes like that would provide real jobs.
The Government have no strategy for industry. They are quite happy to rely on privatisation and to try to bring about mergers that have collapsed. That happened in the case of General Motors and Leyland Vehicles. We look


forward to hearing the facts when they come out and learn what part the Chancellor of the Duchy of Lancaster played in that. Apparently, he initiated it and then advised against it. The Government have allowed the American company Sikorsky to take a stake in our only independent helicopter manufacturer. As we have seen, the trade unions there which supported the employers are now paying for that support because we now see Westland withdrawing recognition from the foremen and chargehands at Weston-super-Mare. Because of the American influence, will we see a non-union company develop at Westland?
The amount of money sloshing about in the City has given rise to a spate of mergers. There is a proposed merger between Allied-Lyons and Elders IXL. We have seen the bid for the Distillers Company, first by Gulliver and then by Guinness, and there has been an attempt by GEC to take over Plessey. What relevance has that for employment? The spate of takeovers will lead to asset stripping, and unemployment will grow. The Government are not prepared to do anything about any of those things. The Budget should have been used to develop an industrial strategy, but all that it does is react too late to the needs of industry and crisis piles upon crisis.
The Government have no policy, and it is not just the Opposition who are saying that they ought to have a policy for industrial regeneration, because voices are also being raised on the Government side. I wish that some of the people saying that the Government ought to have a fiscal policy to begin to regenerate industry had been giving the same message when they were in Cabinet. We seem to hear them only when they resign. As the number of resignations from the Government grow, so the number of voices grow that say we ought to do something about the regeneration of industry. Nothing is done.
The only thing talked about by most Conservative Members who have spoken is the benefit that will accrue to the City, the benefits that will accrue to those who have and who are not interested in British manufacturing industry, but are more likely to invest in manufacturing industry in rival companies in Japan or the United States or in the developing world. Those pople are not interested in regenerating British industry or in creating prosperity.
The Government ought to use their fiscal policy to ensure that the banks, the insurance companies and the City institutions invest in British industry. Failure to do that will mean that not only will more and more people join the ranks of the unemployed, but we will also become a low tech country. The hon. Member for Eastbourne (Mr. Gow) said the rate of inflation in Greece is higher than ours. That is the level to which Conservative Members are prepared to stoop. They believe that in industrial terms we can be compared to Greece and Portugal. I am happy to say that there are others with more vision, but we cannot expect vision from a Government who are leaderless, rudderless and powerless to stop the ship of state drifting on to the rocks of destruction.
The sooner this Government make way for a Government who are prepared to put the interests of the British people first, especially those of the ordinary people, the better. The sooner the Government end the great divide between north and south, the better. Instead of confrontation, there should be compassion. We should use all our resources to bring people together. We should begin to rebuild the base of manufacturing industry on which the Government were created. We should be

assisting the new industries of the future. Although this Government will not do that, I hope that we shall not have to wait three years before it is done by a new Government.

Mr. Ian Gow: Nearly seven years ago, my right hon. Friend the Member for Blaby (Mr. Lawson) arrived for the first time at Treasury Chambers. He found as Chancellor of the Exchequer my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) who is now Foreign and Commonwealth Secretary. In the early months of 1980, the then Chancellor and the then Financial Secretary established for the then Government and their successor what is described as the medium-term financial strategy. I pay tribute to my right hon. Friend the Chancellor for the consistency and persistency of purpose which he and his predecessor have shown in managing our economy during the past seven years. Consistency and persistency in economic policy have been tragically lacking in the fashioning of British economic policy since the war.
When my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) formed his Administration on 18 June 1970, it was not his intention that we should pursue a statutory prices and incomes policy. It was not his intention that there should be a dramatic increase in the money supply in the closing years of his Administration. It was not the Labour party's policy, when it came into power in the early days of March 1974, that, before barely two years were out, it should go cap in hand to the International Monetary Fund and reverse some, although not all, of the disastrous policies which it had been pursuing in the two preceding years.
What has marked out this Government, not only from the two whom I have mentioned but from all previous Governments since the war, is that we have had consistency of purpose. Consistency of purpose offers for the British people not only the best prospect of economic growth but the best long-term prospect of creating more jobs.
The shadow Chancellor for the Liberal party —the hon. Member for Truro (Mr. Penhaligon)—is not in his place, but the solitary representative of the Liberal party, the hon. Member for Ceredigion and Pembroke, North (Mr. Howells), is welcome. We listened with considerable interest to the hon. Member for Truro tell us that, if we had a Liberal Chancellor, there would be a prices and incomes policy with statutory back-up.

Mr. Richard Ryder: He did not explain.

Mr. Gow: My hon. Friend is right. Who ever heard a Liberal explain anything with cogency or conviction?
On the second day of the Budget debate the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was challenged, wisely, by my hon. Friend the Member for Lewisham, West (Mr. Maples) on what would be the public sector borrowing requirement if the right hon. Gentleman happened to be in Great George street. The right hon. Gentleman replied:
I shall give the figure in a moment.
He said that the amount would be considerably more. He continued:
Before dealing precisely and directly with the question of the hon. Member for Lewisham, West (Mr. Maples), I must deal with the Government's plans for tackling the unemployment crisis."—[Official Report, 19 March 1986; Vol. 94, c. 309.]


Did the right hon. Member for Sparkbrook do what he had promised and deal precisely and directly with the question? He did not. I hope that the hon. Member for Birmingham, Hodge Hill (Mr. Davis) will answer the question that his right hon. Friend did not answer.
My right hon. Friend the Member for Henley (Mr. Heseltine) said that he thought that this year's PSBR could be £500 million more than the £7 billion figure which has been wisely chosen by my right hon. Friend the Chancellor. My right hon. Friend the Member for Henley is entitled to put forward that view—the target of the PSBR is a matter of judgment. I do not believe that, if we had taken a more relaxed view about the PSBR, we would have shown consistency of purpose during the successive dramas of the Falklands war, the miners' strike and the dramatic reduction not only in the price of oil but in the revenue from oil.
I believe that the level of the PSBR has a crucial influence on interest rates. No one is a keener advocate of lower interest rates than my right hon. Friend the Member for Henley. He is the first person to say that we must encourage our industrial manufacturing base. I believe that the surest way in which we can encourage our manufacturing industry is by following that policy of sound money and honest finance which is the best prospect of reducing interest rates.
If I praise my right hon. Friend the Chancellor for his cautious and prudent Budget, I praise him also for his new imaginative scheme to encourage the wider ownership of shares. Nothing has caused greater happiness among Conservative Members than the way in which, since my right hon. Friend the Prime Minister arrived at Downing street, between 925,000 and 950,000 people—it will be more than 1 million people by the time of the next Budget—whom the Labour party wanted to keep as tenants in perpetuity in the public sector have become home owners. I see a former Minister for Housing and Construction—the right hon. Member for Brent, East (Mr. Freeson)—in his place.

Mr. Winnick: What about private tenants?

Mr. Gow: The hon. Gentleman should contain himself. He may get a chance to catch your eye later, Mr. Deputy Speaker. I ask the hon. Gentleman to remain silent.
This increase in home ownership has become accepted by some Labour Members. At the next election, there will not be the same commitment by the Labour party as there was at the last election to repeal our Acts of 1980 and 1984. They may seek to amend them but they will not repeal them. In the past seven years, we have moved the centre of British politics to the right. I predict that the Labour party is fearful lest our new plans for encouraging share ownership should prove to be as popular with the people as was our policy of offering them choice. My right hon. Friend the Chancellor, in extending the opportunities for share ownership, wishes to extend opportunities and choice ever more widely. This is really the people's Budget—[Laughter.] Do you remember, Mr. Deputy Speaker, that the Labour party laughed when we promised that we would give tenants the opportunity to become owners? Today the Labour party laughs when we are

giving to others the opportunity to become owners of capital—an opportunity that they would never have had before.
We have heard from Labour Members and even from the spokesman—now vanished—for the Liberal party that if only the Government would spend more money we would be able to abate what, by common consent, is the tragedy of unemployment. The Labour party should remember its own record of public expenditure and the consequences of that irresponsible expenditure: high interest rates and high inflation. It was those interest rates, that high inflation and that excessive borrowing—often undertaken in the name of compassion—that laid the fearful grounds of avoidable unemployment. In the longer term it is essential that the Government should persevere in their policy of lower borrowing, lower interest rates and insisting that this country, like others, should get rid of overmanning. Only in that way will we have a better prospect of more jobs in the future.
I repeat my congratulations to my right hon. Friend the Chancellor and look forward to another two Budgets in this Parliament.

Mr. Donald Stewart: If the hon. Member for Eastbourne (Mr. Gow) describes last week's Budget as a people's Budget, he will find that it will not be only Opposition Members who laugh.
The hon. Gentleman referred to wider share ownership. I shall not argue about whether or not that would be a good aim. However, we have heard about the 2 million people who bought shares in British Telecom. I am fairly confident that in two or three years that number will have been drastically reduced and the shares will be in the hands of the big institutions.
In opening the debate, the Chancellor of the Duchy of Lancaster referred to difficulties inherited from the Labour Government. I am not here to defend the Labour Government or to argue about whether those charges were correct, but the present Government have now been in power for seven years and they cannot continue, year after year, to say that they are not responsible. A time must come when they must take responsibility for the state of the country.
Most people looked to the Budget for a two-pronged attack on unemployment and poverty. Last Tuesday, the Chancellor made no claim to attack either problem. Had he done so, the claim would have been impossible to sustain. When we remember what happened to the unemployment figures after the right hon. Gentleman announced a Budget for jobs, perhaps it is just as well that he made no similar claim on this occasion.
The Budget resembled a gift of little value well presented in a nice package. The Chancellor's casual and frivolous comment on the prospect of the other half of the oil revenue disappearing over the next 25 years seemed to me to be complacent and irresponsible. Had it not been for the oil revenues in recent years, the United Kingdom might well have been obliged to file its petition in bankruptcy.
The tax on petrol will have serious repercussions, particularly in Scotland where petrol is generally dearer than in the rest of the country and where rural areas and islands are dependent on road transport. If the right hon. Gentleman really believes that the oil companies should


absorb the new tax, he should take the necessary action to oblige them to do so. Those hungry hyenas will not cooperate with him otherwise.
The hon. Member for Eastbourne was pleased with the personal equity plan, which allows for relief of taxes on investments of £50 per week. With the appalling unemployment figures and widespread poverty, most of our fellow citizens will regard that measure as a joke in poor taste. Many of them do not have that amount to live on. Even from the capitalist viewpoint, I gather that if one lifts the shares when the stock market is dropping, the tax relief will not be forthcoming.
I welcome the action taken on charities. At last the iniquitous VAT on distress alarms, welfare vehicles for the disabled and so on is to be removed. It should never have been imposed. I also welcome the relief on employee donations to charities and the relief to companies on one-off gifts, which should be of substantial help to many worthy and needy causes. I am sure that that aspect of the Budget will receive universal approval.
I also support the increased duty on cigarette tobacco. As a pipe smoker I should declare an interest, but I agree that tobacco in general is a legitimate object for raising revenue, with improved health as a bonus—although I suspect the Chancellor would be taken aback if everyone gave up tobacco at the same time.
The wealthy section of society has been handed substantial increments by the abolition of tax on lifetime gifts. I agree with the hon. Member for Truro (Mr. Penhaligon) that it is a disgrace that that tax should be abolished at such a time. When one thinks of the lack of funds for the universities, the cutting of student grants and so on, the abolition of that tax is iniquitous.
The reduction of a penny in income tax is gimmickry. Everyone wants more money, but the Prime Minister and the Chancellor evidently believe that people are all hungry materialists with no higher aim in life than a reduction in income tax. The Government boast about the reduction in income tax, but the same Government imposed 15 per cent. VAT on almost all goods and services. In my view, many people would forgo tax reductions if that helped the unemployed and the old-age pensioners who have suffered severely this winter. The money could be better used in providing schools, hospitals and houses. Our housing stock is a serious problem that some Government will have to face in four or five years.
It is nonsense to reduce income tax when the Health Service is in dire straits. The DHSS quotes statistics about more doctors and nurses but the public knows that the Health Service and the hospitals are at crisis point. That penny could have been used for education, for the universities, or for improving student grants. I and my hon. Friend the Member for Dundee, East (Mr. Wilson) will join the alliance in voting against the reduction in income tax. Even British business puts tax cuts far behind help for the unemployed in its list of priorities. The Government might have taken their friends' view into account.
The Budget was a political, not an economic, one. I hope and believe that the Government will pay the political price.

Sir Julian Ridsdale: I congratulate my right hon. Friend the Chancellor of the Exchequer on a prudent and cautious Budget. Looking after the country's finances

is no different from looking after the finances of a family. At times one has to be cruel to be kind. It is not easy to restrain Government expenditure, especially when unemployment is rising so severely, and when we are already spending about £2·5 billion on employment and training measures in 1986, increasing to nearly £3 billion in 1988. However, let us remember that every £100 million spent on employment measures comes from other businesses and other people in employment. Squeeze them too hard by higher taxes or higher interest rates and one destroys hundreds of thousands of jobs that would otherwise be lasting jobs.
That is why I have supported all along the restraints on Government spending, which I am glad to underline have now got us to the position where my right hon. Friend the Chancellor of the Exchequer is able to reduce interest rates and point to a growth rate this year of 3 per cent.—1 per cent. more than is estimated this year for Japan—with inflation moving, I hope, somewhere near that figure, too.
We hear a lot about industrial planning and helping industry, but from my visits to industry—especially recently to the exciting KTM factory in Brighton, part of the Vickers Group which is making machine centers—I find general agreement that the best way for the Government to help manufacturing industry is by lowering interest rates and working for stable exchange rates. As my hon. Friend the Member for Eastbourne (Mr. Gow) said, we are unable to reduce interest rates unless we have a stable public sector borrowing requirement. That is why I join him in being nervous about some of the luxuries that at this moment my right hon. Friend the Member for Henley (Mr. Heseltine) wishes to have.
In my view, at the moment we must take care of our international competitiveness which is being threatened by the United Kingdom paying higher increases in wages than West Germany, Japan or the United States, which are helped by far lower tax bases than we have.
The Social Democratic party and the Liberal party oppose the reduction of 1p in the basic rate of income tax, yet, to quote from the speech of the hon. Member for Stockton, South (Mr. Wrigglesworth) in the debate on 20 March:
In recent years, unit labour costs in Britain have continued to increase consistently compared with the costs of our major competitors. That must stop."—[Official Report, 20 March 1986; Vol. 94, c. 462.]
I agree with what he says, but surely the Budget helps in this respect. Everybody agrees that the single person earning £140 a week—that is the average wage in my constituency—is paying too much tax. I admit that I thought that that person would benefit from higher thresholds rather than from the basic rate reduction in income tax. On the contrary, as my right hon. Friend the Chief Secretary to the Treasury told us on 19 March, that person will gain a 95p a week reduction in the basic rate, compared with 69p a week for an equal cost increase in allowances.
I am glad that those people will have £1·70 more in their pay packets as a direct result of the Budget. For a married couple on average earnings, the figure is £2·59 a week. For the employee on average earnings, the reduction in the basic rate, plus the increase in thresholds, is the equivalent of an increase of £4 a week in gross pay. I am surprised that although the Liberal party and the Social Democratic party are complaining about Britain's international


competitiveness they complain when the Government take 1p off the basic rate of income tax, which will help to alleviate this problem, and yet intend to oppose it in the Lobby.
This pay increase does not damage the competitiveness of British industry and does not put other people's job, or that employee's job, at risk. As the Chancellor said, this is a springboard Budget for making our industry more competitive, but with limited resources available this year because of the £5 billion spent on the miners' strike last year and the £6 billion fall in oil revenues—lost because of the change in the oil price. I hope that we can have more meaningful tax reductions from the springboard that the Chancellor has put in place, because that is the best way to stop our international uncompetitiveness. That is why I am so surprised that the Social Democratic party and the Liberal party do not see this.
Finally, I turn to the wild promises of the Labour party which have been costed at £24 billion, with promises of £3·5 billion extra for pensioners. It all sounds so like a repeat of the disastrous policies between 1974 and 1979 that led to runaway inflation and the erosion of the lifetime savings of so many pensioners. Nevertheless, I should be wrong if I did not point to the 18·9 per cent. increase in rates which we are having to face in Essex this year and to the heavy heating bills that pensioners are having to face because of the severe winter. Proper indexation of income thresholds for pensioners in the Budget will help, but I would urge the Government to do more ahead of the promised reform of local government finance to help pensioners because they have been so badly hit by these large rate increases.
Surely there is no better way of doing that than by giving next year a very generous Christmas bonus as a dividend to pensioners to share in our growing prosperity, to assess the present Labour promises and to remind pensioners that twice the Labour Government cut the Christmas bonus in those disastrous days between 1974 and 1979. Compared with those days, Britain is back on the rails and heading towards an age of prosperity. But let us make no mistake. We shall have that age of prosperity only if we keep a Conservative Government in power.

Mr. Eric S. Heffer: On a number of occasions this evening hon. Members have referred to previous Labour Governments. I want to make one clear statement and then say no more about it. Whenever Labour Governments have made mistakes, they made them because they were following the type of policies that had been set down by members of the Conservative party. In other words, they accepted Conservative ideas rather than Socialist ideas. That is why Labour Governments have made some fairly serious mistakes from time to time. When I have been in the House I have said so. I trust that a future Labour Government will not make the kind of mistakes that Labour Governments made in the past.
It has also been said many times during the course of this debate that the problem is that workers earn too high wages. In an exchange with the Chancellor of the Duchy of Lancaster I said that this is the old, old story. I first heard it when I was six or seven years of age. I did not understand then what it was all about. However, I have always been told that our economic problems are due to

the fact that the awful working people earn too much and that if only their wages were cut everything would be all right. The problem is that when their wages are cut, as happens in areas of high unemployment—for example, on Merseyside and elsewhere—it does not lead to an increase in employment. All it does is to depress the condition of the people and make the situation worse.
The best thing that I read about the Budget appeared in yesterday's edition of The Observer. I am not reading The Sunday Times at the moment, so I read The Observer with even greater interest. What did The Observer say yesterday? It said:
There is a very British feeling in the land at the moment that enough has been done for the rich. Now should have been the time to ease the pain a little at the lower end … There is, too, a feeling that the money being made in the City is unseemly, that it is industry and jobs that matter and should be assisted. There was no need for the Chancellor to play silly games over a penny off income tax, less-than-expected increases on petrol, and nothing on beer or whisky.
The article ends with this statement:
As Lord King commented, it is she who is in charge. And that means—goodnight, nurse. You are a fool to believe that public service or fair play matter. This is the day of the speculator and the inheritor, the greed of the oil companies and the slickness of the City operators. This is Mrs. Thatcher's Britain, 1986.
That is what the Budget is about. It is a rich man's Budget. It helps the rich but does not help the poor.
Also in The Observer—I am sorry to keep quoting The Observer but I think that it is of interest—there is the following:
The Chancellor signally failed to provide any specific help for the country's poorest families. They did not even earn a mention in his speech, and welfare groups are bitter.
I should think that they are bitter because the people who gain—and it gives all the figures in the newspaper—are once again the higher income groups in this country. The ordinary working people and those who are not working have once again suffered under this Budget because it is in line with the ideological position of the Government. The Government are a very ideological Government. They believe that the capitalist system is the best of all systems. They ignore the fact that it is crumbling around their ears and that there is increased unemployment, poverty and misery amongst people. All they see is increased profits for some people and they believe that that proves what a successful society we have. We are in this position precisely because we have a capitalist economy with a capitalist Government carrying out capitalist policies.
I have no hesitation in saying that the only real answer is Socialist policies. I get a little upset when I hear some people from my party apologising for our past policies and for our Socialist concepts. I do not apologise for them and I never will. I well remember what the 1945 general election manifesto said. It was a grand manifesto. We should think of what happened at that time and the crisis that the people of this country had to face. The soldiers, airmen and sailors were coming back from the war. There was a danger that we would have a problem similar to that which occurred after the first world war with an immediate increase in mass unemployment. That was not the case. We did not have mass unemployment. The Government dealt with the problem and they did not drop their policies such as public ownership. They took into public ownership a whole series of industries, introduced a National Health Service and created the welfare state. They laid the basis for the society we have had since 1945.
I say to my comrades on the Front Bench—[HON. MEMBERS: "Comrades?"] Yes, comrades. I say to them, do not be mesmerised like rabbits in front of the Thatcher stoat. The way to handle the Thatcher stoat is to deal with it positively and get rid of it. The answer is to carry out the sort of policies that were carried out in 1945, which are still basically the policies of my party. That is the way to deal with the crisis. The Budget is a disgrace and a disaster. It is a Budget for the rich and at the next election we shall have a change in Government. That Government will reverse the whole policy, trend and system we have been suffering under for the past few years.

Mr. Tony Baldry: There is no doubt that falling oil prices have presented British industry with an outstanding opportunity to increase its exports, win a larger share of world markets and orders for jobs. As the Chancellor made clear in his Budget speech, industry
will only be able to seize that opportunity if it meets two conditions. First, it must keep firmer control of its labour costs. Secondly, it must spend more of its much healthier level of profits on investing for the future in research and development and in training."—[Official Report, 18 March 1986; Vol. 94, c. 169.]
I want to consider those points because I believe that they are critical to whether we succeed as a competitive trading nation.
For a long time Conservative Members have spoken about the responsibilities of trade unions. I believe that it is imperative that we now alert the nation to the responsibilities of employers, particularly the importance of industry and employers controlling wage costs, and investing in research and development and training. I believe that those three items are conditions precedent to our sustaining success into the 21st century.
In January the Organisation for Economic Co-operation and Development published a survey which focused on our labour market since 1979. It found that in Britain the failure of wages to adjust to lower inflation and increasing unemployment was at the core of our unemployment difficulties. Further, the OECD considered that the failure of Britain to moderate wages ruled out the option of any general reflation of the economy to reduce unemployment because it concluded that, without greater wage moderation, any stimulus to demand would simply be dissipated in higher inflation.
The OECD further found that in other developed countries higher unemployment had led to a downward pressure on wages, in stark contrast to Britain, where earnings have continued to rise steeply irrespective of unemployment levels. In those circumstances, the OECD concluded, pessimistically, that there is little that macroeconomic policy can do to reduce unemployment.
None of that should come as any surprise. Only last summer the House of Lords Select Committee on Overseas Trade published its findings. It asked its statistical staff to produce figures for unit labour costs for manufacturing in Britain and elsewhere. It found that since 1962 labour costs per unit of output in America had hardly doubled, in West Germany they had slightly less than doubled, in France they rose four times, but in Britain they had risen six times.
The simple fact is that in those countries we consider to be the most well off—for example, West Germany and the United States—the rise in wage costs has been the smallest. Indeed, in 1984 real average earnings in the

United States were lower than in 1962, in contrast to Britain where we simply continue to pay ourselves as a nation more than we earn. Average earnings were up by 8·3 per cent. last year compared to inflation of only 5·5 per cent. There has to be a new sense of responsibility in pay claims if Britain is to improve her competitive position and if we are to have any chance of significantly increasing the flow of new jobs.
Let us all be clear about at least two things. First, extra spending of the type and degree consistently advocated by the Opposition—borrowed money pumped into the economy—would not go towards output and jobs. It would simply disappear in higher pay and prices. Secondly, pay is one of the main reasons, if not the main reason, why we have such a disastrous unemployment total. Even unemployment based on the lack of industrial capacity reflects excessive pay awards of the past. Of course, people like getting wage increases well above inflation but that has a cost for the whole community. It has a cost in lost jobs.
In successive years the Government have reduced the burden on business, for example, by abolishing the national insurance surcharge, only to see industry placing a greater burden on its own back by allowing unit labour costs to soar because of excessive pay awards. Excessive pay awards mean that our goods cost more to make. Therefore, the goods cost more to buy, fewer are bought and fewer are then made. That results in higher unemployment.
Pay awards constantly that are ahead of inflation in the private sector also lead to pressures for greater public spending and greater taxation. Teachers, for example, are not complaining that their salaries have not kept pace with inflation; they know that they have. The teachers' complaint is that their pay has fallen behind the private sector and, understandably, they want to catch up. That inevitably means pressure for more public spending and thus more revenue from taxation, fuelled by the private sector failing to face up to the reality of the wage settlements in this country. I have a nightmare that some managers prefer having an overpaid workforce, as long as its numbers are kept to the minimum. They do not want to create new jobs if they can manage it. But we need more new jobs, and that means wage moderation now, and leadership from management and employers.
To that end, I am sure that the whole House will welcome the new proposals for profit sharing, the idea that part of the pay packet should be related to profit and performance. The suggestion that a significant slice could be taken off the tax burden of those who enter profit-sharing schemes is good news, and, further, can lead only to greater employee involvement, which is also good news. However, the stark reality is that employers and managers have to get a grip on spiralling wage costs if we are to get more people into jobs.
If we are to compete in the 21st century, industry has to invest more in research and development. Let us consider a few stark facts concerning just one key area — information technology. IBM's European data processing revenue of almost $10 billion equals the combined turnover of its 10 closest competitors, which illustrates the dominant position of the United States an advanced technologies. It is not surprising that Europe is estimated to import 80 per cent. of the personal computers that it requires, mainly from the United States. As for silicon chips, Europe's market share for the supply of


advanced metal oxide semiconductors, which will dominate chip-making for the next few years, is just 6 per cent.
If we are to keep in the forefront of the new technologies that will dominate the 21st century, British companies must invest more of their profits in research and development, because if we do not invest in the future, we shall simply find ourselves struggling ever harder to preserve the industries of the past. Certainly, the British Government and the European Community are acting to stimulate industry to increase research and development. There is the Esprit programme, which concentrates on improving information technology, the BRITE programme, the RACE programme for broad band communication, and the Eureka programme to promote awareness of the practical opportunities that research might bring. If one wants to see the success of investing in research and development and of greater industrial collaboration in Europe, one has simply to look at Airbus and our aviation industry. Airbus, now successfully competing with Boeing, is winning orders and creating jobs. But British companies have to invest more in research and development, and they have to spend more on training.
A recent report called "Challenge to Complacency", commissioned by the Manpower Services Commission as a follow-up to the National Economic Development Office report entitled "Competence and Competition", condemned employers for their indifference to training. The report found that the vast majority of companies studied were not very interested in training and
had an attitude which bordered on complacency.
Indeed, few chief executives interviewed appeared to have much knowledge of the training activities undertaken by their firms. Compared with the United States, Germany and Japan, Britain's record of the training of adults is lousy, with training being seen not as an investment but, all too often, as an overhead to be reduced when times are difficult.
If we are to succeed, we have to become a nation of lifetime learners. The tools and the technology that are used can be same the world over. What makes the difference is what one does with that technology, and that means the skills and knowledge of those who are using the technology. That means industry having to invest more in training and in people. During the next five years the impact of new technology will involve something between half and three quarters of the nation's entire work force needing to update their skills just to keep pace with new technology.
My right hon. Friend the Chancellor's Budget is imaginative and creative. It promotes wider share ownership; it stimulates greater growth; and it builds on the continuing improvements in our economy. But if Britain is to maximise opportunities presented by the Budget and falling oil prices, employers will have to realise that they have responsibilities to ensure common sense on wages, to invest in research and development, and to invest more in training.

Mr. Reg Freeson: I should like to make an observation on the remarks of the hon. Member for Banbury (Mr. Baldry). If one wants the economic and

social ethos to which he referred, national standards will have to be set. If one wants national standards to be set, it is the Government who should be in the lead on that. One will not get a willingness to undertake increased research and training, which the hon. Gentleman rightly emphasised, if at the same time the Government are cutting in those very areas in our educational establishments. That is perfectly true, and the hon. Gentleman should look at his figures.
Those who take pride in the financial strategy of the Budget, such as the Chancellor, and those who have applauded it, with a few exceptions, on Conservative Benches, are, in effect, applauding and taking pride in continued decay and mass homelessness in our inner cities, the physical decay and decline of our schools, as well as the services that are provided in many of them, and the continued decline of the less often mentioned areas of rural deprivation, which are often cheek by jowl with affluent "exurbs", as the Americans call them. Any pride in such a financial strategy means pride and applause for the things that I have mentioned and many others, too. One cannot have continued restrictions on public expenditure and investment and at the same time put one's hand on one's heart and complain about the crumbling of the inner cities, homelessness, decay in the state of our homes, particularly houses that elderly people live in, and decay in the schools, in our public services, our environment, and so on. The Government are reaching the stage where they are presiding over environmental slums in vast areas of our cities.
I shall concentrate on one or two of the things that I believe could have been dealt with in the Budget rather than comment too much, except indirectly, on what is in the Budget. Potentially, the main generator of economic revival would be what we loosely call the construction industry. In fact, it is a group of industries and services. Many reports have been emanating from that industry and others — the Confederation of British Industry, the Building Employers Confederation, the Federation of Civil Engineering Contractors, National Council of Building Material Producers, the Royal Institute of British Architects, the Duke of Edinburgh's study into housing conditions, the House-Builders Federation and the Housing Corporation. All the reports and studies have been pigeon-holed by the Chancellor and the Treasury. Not a thing has been done in the Budget to tackle any of the problems that have been identified in detail—not in general rhetoric—in those reports. Not a single thing is to be found in the Budget that tackles any of the over-urgent problems depicted and detailed in those reports. This is not the first time. We have had several years of that.
Therefore, our housing, schools, colleges, hospitals, roads, sewers, inner cities and deprived rural areas will continue to decline, decay and crumble. When that grows into rioting and other foul conditions in our cities, all the fine speeches and expressions of concern will mean nothing if nothing effective is done about that. Millions of people who are unemployed could be tackling some of those problems. They remain unemployed while huge fortunes are being made in the wasteful buying and selling of existing assets, when we could and should be conserving and creating assets. The strategy should be to create assets. We should invest in that, not in buying and selling.
Those are the issues which could have been dealt with, in part, by the Budget, and which I want to develop. Investment in infrastructure and capital works in public services could be increased without the risk of higher inflation. I agree with the right hon. Member for Henley (Mr. Heseltine) that it could be done. Indeed, there could have been increased public sector borrowing without affecting inflation. That is shown analytically and conclusively in the full submissions by the sections of the industry to which I have referred, and by other bodies.
The Chancellor's response last week was that the appropriate policy was to keep borrowing low. I understood him to mean that he was talking about the private as well as the public sector. He did not refer specifically to the public sector borrowing requirement. Although it has not been stated, I have suspected for a long time that Government policy was directed to confining and restraining borrowing across the economy, irrespective of the public or private characteristics of the borrowing, but that they always concentrated on public sector borrowing. There is nothing new about that. It has been going on for years.
Ways could be found to increase investment in rented housing, the inner cities and infrastructure. It means more public sector borrowing. After all, we are borrowing for massively high unemployment. That is where the biggest burden lies. The burden is roughly equivalent to the revenues in the last five or six years from the North sea, which amount to thousands of millions of pounds annually. It would be far better to have a strategy directed to using that resource for the creation of assets rather than unemployment. I echo what the right hon. Member for Henley said on that score.
I shall put briefly to the Chancellor some proposals which could and should be adopted by the Government now without conflicting with what I believe to be their wrongful prejudice against increased public expenditure in such areas. Time forbids me from developing the proposals in detail. With his colleagues in other Departments, in particular the Department of the Environment, will the Chancellor take action to put a stop to the underspending on derelict land and development grants? Underspending occurs mainly because of the bureaucratic procedures employed by the Department of the Environment in processing the grants. Hundreds of millions of pounds are involved in the underspend. Each thousand pounds spent on one of those grants produces £6,000 or £7,000 of private investment.
Housing associations have experienced massive cuts in expenditure in recent years, as have local authorities. The housing associations have made detailed, not general, proposals to the Government to marry the grant expenditure, however limited, with private investment. They have worked out schemes in negotiation with building societies to couple the two organisations. There is one obstacle to that partnership approach—the Treasury. The Chancellor and the Treasury are forbidding housing associations to line up private capital with housing association grants which could double the effects of grant expenditure on rented housing. Instead of 15,000 homes a year, 30,000 could be started. I urge the Chancellor to take action.

Mr. Richard Ryder: The right hon. Member for Brent, East (Mr. Freeson) bemoans the

Government's low public expenditure. It comes as some surprise since he was happy enough to remain in a Labour Government between 1976, when the Government were forced to go to the International Monetary Fund, and 1979, when they were defeated at the polls. Public expenditure in real terms on the Health Service fell by 30 per cent. in that time, as it did on major road construction.
During the Budget debate Opposition Members such as the right hon. Member for Brent, South urge the Government to spend a great deal more money and to expand the public sector borrowing requirement. They have tried to depict the Government's prudent fiscal policy as a dogmatic experiment which no other sensible nation dares to follow.
In such circumstances it is reasonable to look abroad to discover whether Britain is, as the Opposition contend, the odd man out, or whether the truth is that other countries are pursuing identical fiscal policies to those of the Conservative Government in Britain. Needless to say, Governments of the centre Right in Japan and Germany are pursuing precisely the same policies as Her Majesty's Government.
What about democratic Governments led by the Left, particularly in Europe? What policies are they pursuing? Under President Mitterrand in France the Socialist Government introduced their budget in September last year. It was the toughest budget introduced by any French Government since the war. It involved huge public expenditure cuts across the board, but included—I must tell the right hon. and learned Member for Monklands, East (Mr. Smith)—an increase in law and order expenditure. Defence expenditure was also increased by 2 per cent. President Mitterrand cut public expenditure on trade and industry. Public expenditure on the car industry was sliced through Renault. Expenditure on the steel-making industry through Usinov was sliced by a Socialist Government. Expenditure on social security was cut too. A person under the age of 25 in France, who has been unemployed for longer than six months, can be deprived of unemployment benefit. Psychiatric treatment in the French health service has been farmed out to the private sector. All that has happened under a Socialist Government.
What about Socialist Spain? The Socialist Government in Spain last year introduced the toughest ever budget since General Franco's time. That Government have sliced 20 per cent. from capital spending on infrastructure and nationalised industries. The Socialist Government in Spain have cut pensions. A new pensions reform law came into operation last August, and lower pensions will now be paid.
The same applies to Italy where the Socialist Prime Minister, Mr. Craxi, presented an austerity budget to the Italian Parliament last September. Health spending was to be curbed by raising prescription and other charges by at least 19 per cent., and by as much as 25 per cent. Italy imposed hefty cuts in welfare benefits and families with only one child are no longer to receive benefit. Concessionary rates for travel on railways and for electricity are to be cut. University fees, about which we hear so much, are to be raised significantly by that Socialist Government.
I have been talking about budgetary policies by Socialist Governments who have to grapple daily with the


realities of office, rather than dallying in the sort of rhetoric of opposition that we have heard from the Labour party and the alliance in the last few days.
I have a little piece of good news for the right hon. and learned Member for Monklands, East. I have a small consolation for him. There is a Socialist Government in the democratic world which has pursued almost the same policies as he recommends we follow here. That Socialist Government is the Government of Australia.
The Australian Government have increased public expenditure and there have been six major consequences. During the past year the Australians have had to devalue their currency by 20 per cent. Interest rates in Australia under a Labour Government have hit 20 per cent. and small businessmen have been driven into bankruptcy. The inflation rate in Australia is double the OECD average and there is rising international debt in Australia. The Australian balance of payment problems are a cause for enormous concern. Lastly, industrial disputes are increasing rapidly in Australia.
All these problems are being encountered by a Labour Government in Australia who are putting forward, and have implemented, precisely the same policies that the British Labour party is suggesting should be followed in Britain, and which a Labour Government would introduce.
If Britain wants to embrace extravagant policies of the Left, it has only to look at what has happened in Australia. That which has happened in Australia would happen here if a Labour Government were elected. We should have double-digit inflation, and interest and mortgage rates of 20 per cent. We would have industrial strife on the scale of the 1960s and 1970s. We would have rising international debt, balance of payments problems and currency devaluation. It is because I do not wish these kind of Labour policies to be pursued in Britain or to witness their consequences if the Labour party is given the chance to form a Government that I shall be supporting my right hon. Friend the Chancellor of the Exchequer when the House divides. I congratulate him wholeheartedly on introducing an excellent Budget.

Dr. Jeremy Bray: There was a joker missing from the Budget statement of the Chancellor of the Exchequer, and that was exchange rate policy. The Government started out in 1979 with the view that markets could be trusted to manage exchange rates better than Governments could. They considered that Governments had no real power in the face of market forces and today's capital flows. The Chancellor of the Exchequer seems now to have abandoned these extreme views. He has recognised that the exchange rate is an important indicator and he took part in the Group of Five meeting in September 1985 when the main industrial countries agreed to take concerted action to move interest rates and exchange rates. Indeed they have moved in the directions needed to correct imbalances in cost competitiveness and trade that have done more damage to Britain than any other country.
The movement that has taken place seems to have exhausted the extent of the agreement. The United States might like the dollar to be lower, but Japan seems to think that the yen has risen enough. So where do we go from

here? What is our national interest with the pound? What understanding should we seek from other industrial countries?
The Chancellor of the Exchequer is slowly learning the lessons that are set out in the second special report in 1983 of the Select Committee on the Treasury and Civil Service that was produced at the end of the previous Parliament. The right hon. Gentleman is following very much the course that we recommended to him. Mechanistically he repeats the formula that is now a regular feature of financial statements. It is as follows:
There is no mechanical formula for taking the exchange rate into account in assessing monetary conditions".
Last year the phrase was:
There is no mechanistic formula".
But this year he goes on to give the exchange rate an independent role. He states:
a balance must be struck between the exchange rate and domestic monetary growth consistent with the Government's aims for money GDP and inflation.
The "balance" of objectives which the Chancellor of the Exchequer talks about he may not like to describe as a mechanism, but there is a computer programme operating in the Treasury which comes remarkably close to doing what the right hon. Gentleman describes. The Government have a number of policy instruments, including fiscal policy, which they adjust annually in the Budget. Interest rates and intervention in the money and foreign exchange markets are instruments which they can adjust more frequently and even continuously. The effects on unemployment, growth, the balance of payments and inflation are not measurable continuously, and even shorter-term monthly measures are often not a reliable indicator of trends. The effects on the exchange rate and capital flows are, however, observable continuously, and are very important.
There is, therefore, a slowly moving background of final objectives and fiscal policy, and a rapidly moving foreground of market expectations, intervention, interest rate adjustments, and their effects on the exchange rate and capital flows. The shorter-term foreground and the longer-term background are part of the same scene. They interact and they have to be mutually consistent.
To set the background, it is necessary to attach priorities to the final objectives of growth, employment and stable prices. It is not a question whether unemployment matters. Of course it matters, even to the Chancellor. But the Chancellor is prepared, perhaps, to give less priority to the speed of reducing unemployment than the Opposition would. Any Chancellor will set the instruments at his disposal to achieve the best achievable balance of objectives given his priorities. That is broadly the content of the Budget speech and the Financial Statement and Budget Report, which includes forecasts of the expected outturn. It enables the House to judge the Government's priorities, and it also sets the expectations of the markets.
But one thing is for sure: events will not fulfil those expectations, especially for the most variable short-term indicators, such as the exchange rate and financial markets, which in the absence of any definite expectations can go all over the place.
The Chancellor of the Exchequer does not even spell our precisely his expectations for the exchange rate, which is said to be assumed to remain at broadly its present level. That may or may not be right. But what is done internally within the Treasury? The computer programme that I


mentioned is operated by the Treasury. It indicates fiscal policy instrument levels that are appropriate to the balance of priorities or final objectives. But it also picks short-term rules which indicate the adjustment of, for example, interest rate changes which will be needed in response to movements of the exchange rate from its expected path. None of this leads automatically to policy adjustments. It is not in that sense a mechanism. But it does give guidance which, on the best evidence available, achieves a balance between objectives, and a coherence of shorter-term actions on interest rates and longer-term actions on fiscal policies.
This apparatus does use our old friend the Treasury model. It can handle various types of expectation formation and uncertainty, and select a policy which produces a reasonable result on models based on conflicting economic theories. Very much the same sort of action now emerges from the Treasury, London Business School and National Institute models, now that they are being more rigorously tested and compared. We have, therefore, a basis for a more pragmatic fiscal and monetary policy which properly reflects the Government's priorities at the national level.
But what about the international level? Can we trace the international repercussions and reactions? A fortnight ago, at a conference of the Brookings Institution in Washington, the first comparisons took place between the internationally linked model systems maintained by the Federal Reserve Board, the OECD, the Japan Economic Planning Agency, and nine other systems. The Treasury, the Bank of England and the IMF were all well represented so the Chancellor has his own reports of what took place. There were, of course, substantial differences, particularly among the outliers. But what impressed me was that in the models that mattered there was broad agreement on the sign and on the timing of effects of fiscal and monetary changes in the United States on the rest of the OECD, and conversely. It looked as if the apparatus was there to provide the analytical framework needed for international negotiation and co-operation in our mutual interests.
In the Treasury programme that I described, the level and weight of the exchange rate target has to be set externally. So, notionally, these are adjustable in international negotiation. If the exercise that the Treasury does is done on one of these international model systems, each country can be left to specify its own priorities, and the system will produce a set of exchange rate rules which would maximise the sum of benefits to all countries, or, perhaps more appropriately, maximise the minimum benefit to any one country. That does not, of course, dictate the outcome of negotiations but it gives it a sound analytical basis and, therefore, a better chance of success.
If the evidence of the conference is anything to go by, Britain now enjoys a comparative advantage in such work. It would be in the British interest if the Chancellor were to say rather more about his exchange rate policy and spell out the evidence on which it is based. Most importantly, it can encompass the hazards that remain on the oil price. I would not expect that to lead to our joining the EMS, but I would expect it to stimulate work by other Governments and the international organisations leading to developments in the EMS, in the context of wider international cooperation, in which we could join with the hope and expectation that we could avoid exchange rate wars and the gross misalignments of currencies which have done so much damage in recent years.

Mr. William Powell: The hon. Member for Liverpool, Walton (Mr. Heffer), who unfortunately is not in the Chamber, is much admired in the House for his consistency and sincerity. However, when he chose to argue that Labour Governments have only gone wrong in the past because they abandoned Socialism and that if only they had pursued red-blooded Socialism they would not have gone wrong, I could not help but reflect that the Labour Government were not pursuing Conservative policy when they were driven to the IMF. Frankly, over the course of the past four days of this debate the Opposition have presented us with a picture revealing a remarkable reluctance to come to terms with those aspects of previous Labour rule which led them invariably to shipwreck and which are being pursued and continued today, as my hon. Friend the Member for Mid-Norfolk (Mr. Ryder) said, by a Labour Government on the other side of the world.
It is very easy to mouth platitudes, to be in favour of everything progressive and to say that if only one was given the opportunity of putting such things into action then everything would be right. People who say that fail to come to terms with the fact that such a policy, when tried in the past, invariably led to failure.
The simple truth is that previous Labour Governments went wrong not because they failed to pursue red-blooded Socialism, but because Socialism is the locomotive of inflation—the locomotive which destroys jobs and leads to the social breakdown which has caused so much comment during this debate.
It is impossible, after more than 80 speeches during the course of the debate, for one of the last Conservative Back Bench speakers to contribute anything novel to the debate. It would not be worth while my trying to do that. Instead, I should like to congratulate my right hon. Friend the Chancellor of the Exchequer on a number of points. I congratulate him and the Governor of the Bank of England on the way that they have handled the currency instability which occurred in January and February of this year. At the same time last year, when we had a period of currency instability, not everyone was universally happy with the way in which it was handled. However, there cannot be the slightest doubt that the way it was handled this year has been dramatically successful. Heads have been kept, and, at the very time when everyone was forecasting that things would go off course, that did not happen. Considerable praise is due to my right hon. Friend the Chancellor and to the Governor of the Bank of England for handling things extremely well this year.
I also congratulate my right hon. Friend the Chancellor on continuing the policy adopted in previous years and on maintaining course. Many people think that each Budget should be a new beginning each year. Many wish to blot out previous years and think that it is possible to have a new beginning each year. Of course, this year's Budget is merely a development of a policy that has been carried on—thank goodness—for some years. I have no doubt that the measures taken last year will continue to have a beneficial effect upon economic activity during the course of next year and that the recent and new measures will take some time before they have their full impact on the economy. A Budget is not and cannot be a new beginning.
It is part of the progression of policy. My right hon. Friend deserves all praise for seeing it in that context and not in the way in which so many would have him view it.
I should also like to take this opportunity, perhaps belatedly, to congratulate my right hon. Friend on the elimination—I have forgotten just how long ago it was done—of the halfpenny from our currency. That had one very good effect during the course of the debate. The hon. Member for Truro (Mr. Penhaligon), representing the Liberal party, was not able to come to the House as he would have done in previous years and advocate not a penny reduction in the standard rate of income tax, but only half—a halfpenny reduction. The elimiation of the halfpenny from our currency has at least had the effect of forcing Liberals to stop trying to halve what everybody else is trying to do and saying that that was the correct judgment to make.
Many of the aspects of the Budget are to be welcomed. I welcome the schemes which will encourage saving. I have no doubt that other schemes will come forward in subsequent years.
I very much welcome the abolition of the lifetime gifts tax, and I commend to the House the remarks of my right hon. Friend the Member for Henley (Mr. Heseltine) who analysed that point clearly in his speech. It has been made very clear that the Liberal party is against the handing on of small businesses through families. They are in favour of small businesses, provided that they are not successful or grow to the point at which they come within tax limits. That humbug, which the hon. Member for Truro articulated, is clearly on the record. I know that in every constituency, including his own, people will realise the nonsense that he was speaking. We can understand the Labour party being completely against family businesses and all that that involves—its opposition to that is honest and straightforward—but the humbug and nonsense from the Liberal party has been clearly revealed for what it is.
A Budget offers the opportunity for developing existing policies. It should never be seen as a new beginning, as so many commentators inside and outside the House choose to see it. I hope that the Budget policy will continue to develop. However, I recognise that we are not as successful as we ought to be in certain matters.
As a country we are deficient in two major areas. First, as a general rule, English people—I choose that phrase carefully—hate selling. There are plenty of exceptions to that general rule. Many successful companies have prospered on that basis, but it is the general rule. We love people to buy from us but we hate the idea of going out and getting a sale. We shall not be successful as an economy until all companies, not just the best companies, recognise that they must go out into the market place and sell their products. That is not something that my right hon. Friend the Chancellor will be able to make clear in his Budgets, but it shows that budgetary policy is only one aspect of the development of the economy. Much has to be done outside.
My second point is that Britain's training provision is desperately inadequate. I hope that companies will recognise much of what has been said during the debate and will use their new-found profits to invest much more

heavily in research, development and training. Thank heaven, they are much more profitable than they were when the Labour party was in power.
Alas, it is not possible for me to develop my arguments. Without going into the judgments of my right hon. Friend the Member for Henley on the fiscal adjustment, the PSBR, and so on, I strongly commend his basic line of approach. I commend the Budget to the House.

Mr. Nicholas Budgen: I want to make three short points. First, I hope that when my right hon. Friend the Member for Henley (Mr. Heseltine) commends, as I am sure he will in his many speeches in the country, the lower cost of borrowing, he will explain to the country how that is consistent with his rather heroic attitude towards public expenditure generally. Those of us who admire and watch what he says will look forward to a further explanation on that point.
Secondly, I regret that in this Budget my right hon. Friend the Chancellor of the Exchequer has effectively abandoned the principle of fiscal neutrality. He has suffered some important defeats in pursuit of that policy. He was defeated over cars and pensions and he has been defeated over mortgage interest relief. He won an important battle upon investment allowances and he has now, at least for the time being, given up the battle. Many Conservative Members applaud that retreat and speak with great approval of the various incentives that he has given to politically favoured interest groups. He has been skilful in his selection of those which he intends should benefit. But my right hon. Friend has persuaded me of the advantages of fiscal neutrality, and I hope that the time will come when the Tory party returns to that principle, although I accept that by returning to it we shall offend many of the interest groups that so often support us.
Thirdly, and finally, I wish to agree with my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) in his criticisms of the observations in the Red Book about monetary policy. But I come to an entirely different conclusion from my right hon. and learned Friend. My right hon. and learned Friend wishes us to go into the EMS. I agree that there is a need for a discipline, but I would assert that disciplines in Britain are better if they are recognised to be internal disciplines—that we recognise that we are doing something not because we are ordered to do it by the IMF, or even the EMS, but because we recognise the social advantages of sound money.
I am somewhat amazed that many of those who wish us to go into the EMS are fierce supporters of our continued membership of the EEC. I am somewhat sceptical of that, but I conclude by saying that those who want us to go into the EMS may be doing the cause of Europe severe harm, because when the time comes to take deflationary action upon the economy if we go into the EMS, we can be certain that it will not be the Government of the day who are blamed, but the EMS and the other nations of Europe. I hope that my right hon. Friend the Prime Minister will continue her opposition to our going into the EMS.

Mr. Terry Davis: After the speech of the hon. Member for Wolverhampton, South-West (Mr. Budgen), the Chancellor may be surprised to know that I intend to begin my speech with a compliment


to him. I always believe that credit should be given where it is due and for once I agree with the hon. Member for Croydon, South (Sir W. Clark), who described the Chancellor's Budget as clever and ingenious. I think that the words were originally used by other hon. Members—the right hon. Members for Glasgow, Hillhead (Mr. Jenkins) and for Worthing (Mr. Higgins)—but I agree that the Budget is clever, skilful and ingenious. As the Chancellor admitted at the beginning of his Budget statement, the fall in the price of oil and the resulting fall in the Government's income from the special taxes on oil revenues mean that the Chancellor is left with little room for manoeuvre within the framework of his principles and prejudices.
I admire the way in which the Chancellor presented the Budget under these circumstances, but I must make it clear that it is admiration of a sort that I give to the cleverness, skill and ingenuity of the professional cardsharp. The only difference was that the Budget deceived the ear rather than the eye, and already the commentators are beginning to realise the truth.
Let us consider, for example, what the Chancellor said about the fall in oil prices and the effect of that fall on the Government and on the economy. As I have already said, the Chancellor made, for him, a remarkable admission. He admitted that his room for manoeuvre was restricted by the fall in oil prices. However, later in his speech, as part of his constant attempt to disguise the dependence of the Government and the economy on North sea oil, he pointed out, quite fairly—I do not argue with the figures—that North sea oil accounts for only 5 per cent. of gross domestic product. The other sectors of the economy—manufacturing industry, agriculture, distribution, construction, public and private services—account for 95 per cent. of economic activity.
The mere statement of these figures constitutes a condemnation of the Government's strategy because the Chancellor is saying that his Budget, his ability to cut taxes or to increase public expenditure, his success and the Government's survival, depend not on the 95 per cent. of economic activity in Britain but the 5 per cent. of economic activity in and around the North sea. The truth is that the vital decisions at the heart of the Government's economic policy are taken not by the Chancellor and the Chief Secretary to the Treasury, but by Sheikh Yamani and his colleages in OPEC. They are taken without any reference to this country or the balance of our economic interests. It is surely ironic that, more than any other part of Western Europe, this country is at the mercy of the middle east. The correct description of any country whose Government's economic policies are determined by other Governments is to call it a colony. That is the role of Britain today. Our colonial past has become our colonial present with the roles reversed.
The price of oil is determined elsewhere and the Chancellor's Budget is entirely dependent on it. Dependent on it? The Government's policies are dominated by it. During the next few months, if the price of oil falls to $10 a barrel, the Chancellor tells us that the result for the Government will be disaster. If the price of oil rises to $20 we shall have a tax-cutting Budget on a massive scale next year—in the run-up to the general election. Of course, the tax cuts will be, and can only be, temporary, because the oil will eventually run out. What will happen then? The Chancellor gave his answer on Tuesday with characteristic sleight of hand:
If we can survive unscathed the loss of half of our North sea oil revenues in less than 25 weeks, the prospective loss of the other half over the remainder of the next 25 years should not cause us undue concern."—[Official Report, 18 March 1986; Vol. 94, c. 168.]
The Chancellor forgets that there is a tremendous difference between loss of revenue due to the fall in the price of oil and the inevitable loss of revenue when the oil runs out. The Chancellor himself pointed out that, although lower prices for oil result in lower revenue for the Government, it also means lower costs to British industry. British industry benefits not only in terms of lower inflation but in terms of jobs. It also benefits, we hope, from the boost in world trade arising from universally lower prices for oil.
What will happen when the oil runs out and we lose the rest of the revenue? That will not have beneficial side effects for British industry. There will not be any reduction in costs because industry will still be paying the international price for oil. There will be no benefits in terms of lower costs, lower inflation and extra jobs.
Every economist knows—I am sure that the Chancellor must know—that his comparison of the effect of lower oil prices and the exhaustion of North sea oil was ingenious but invalid. I envisage a standard question in examinations on economics asking "Comment on the following statement—" after which will follow that classic quotation from the Chancellor of the Exchequer, who will then be a former Chancellor of the Exchequer. Anybody how goes along with him will fail the exam as surely as the Chancellor is failing the country.
We also have the Chancellor's equally skilful, but equally misleading, approach to indirect taxes. Anybody who listened to the Chancellor's statement would have thought that he was putting all of the increases on cigarettes and petrol and leaving all other indirect taxes at the same level. He referred to the vehicle excise duty for cars, vans, and lorries but he forgot to tell us—he refrained from telling us—that only those rates, not all rates of vehicle excise duty, were unchanged.
We had to wait for a press release from the Department of Transport to learn that the Chancellor was increasing the vehicle excise duty on all forms of public transport. Even the Department of Transport took care to tell the editors of newspapers that it was the Chancellor's decision, not its decision, although he had left it to the Department of Transport to make the announcement.
There is no logic about the decision. Those of us who served on the Standing Committee which examined last year's Finance Bill remember that there was no logic or economic justification for the existing pattern of vehicle excise duties. The Government even brought the Parliamentary Under-Secretary of State for Transport to the Committee in an attempt to explain the Government's thinking to us. From what I heard afterwards, Labour members of the Committee were not alone in concluding that the Parliamentary Under-Secretary of State made a bad job of explaining the Government's thinking because the Government had not done any thinking about vehicle excise duty. It is clear from this year's Budget statement that the Chancellor has not given any thought to the level or pattern of vehicle excise duties during the past 12 months either. So much for his claim of wanting to be known as a reforming Chancellor.
The Chancellor's attitude to petrol tax is even more revealing. As he said, petrol prices have drifted down


recently as a result of falling oil prices, but the price of petrol has not dropped as much as it should. By the Chancellor's own admission, the price of petrol should have been 12p a gallon lower than it was on Budget day. What was the Chancellor's response? Did he see his role as the protector of consumers? Did he put any pressure on oil companies to pass on the reduction to the motorist? Did he announce that, although the price of petrol was due to drop by another 12p, he would regretfully have to increase the price by 5·5p to protect the Government's revenue against inflation? The answer is no on all counts. Instead, the Chancellor proposed what was effectively a deal with the oil companies. He said that the oil companies could keep 4·5p of that 12p if only they would let him have the rest—the 7·5p—without putting up the price at the pump, as he put it. He hoped that nobody would notice and that at least the motorist would not mind. It was a typical piece of ingenuity. The price of petrol should have come down, and it should still come down after allowing for the Chancellor's 7·5p, but the Chancellor was offering to keep quiet about it if only the oil companies would deal him in. The Chancellor's attitude to the oil companies is like the attitude of a policemen running a protection racket—offering to keep quiet if he gets his cut.
We also have the ingenuity of the Chancellor's policies to encourage share ownership, especially the personal equity plan. As my hon. friend the Member for Sedgefield (Mr. Blair) explained to the House, if the Chancellor was really trying to encourage new investors, he would restrict the tax benefits of the new scheme to that group. The truth is that the personal equity plan is a device to enable existing investors to avoid the tax on existing investment by switching their funds from their existing portfolios to the personal equity plan. The Chancellor shakes his head. If I am wrong, I am sure that he will explain later, and we shall look carefully at the Finance Bill for that provision. If people are able to switch their funds in that way, they will benefit disproportionately more than the new investor, by obtaining relief on dividends at the highest rates of tax as well as relief from capital gains tax.
This is the Chancellor who claims to want to help the small saver and the small investor. He even referred to his scheme as being designed specifically to encourage the smaller savers. Yet this is the same Chancellor who introduced a new tax on the savings of the smallest savers, the Chancellor whose 1984 Budget imposed tax on the interest received by people whose income was, and is, so low that they would not otherwise pay any income tax. These are the people who typically put their savings in the trustee savings bank or similar institutions and find that when they receive interest on their savings the Chancellor has been there before them and taken his cut of 25 per cent. with all the skill of a pickpocket.
That is not all. There is the same inconsistency in the Chancellor's treatment of other savers—people with incomes above average, who are liable to income tax on their investment incomes. This is the Chancellor who, only two years ago, as the hon. Member for Wolverhampton, South-West has just reminded us, turned the phrase "fiscal neutrality" into a cliché. This is the Chancellor who said that there should not be any difference in treatment of the income that investors and savers receive from different sources. He said that the institutions should compete on equal tax terms. That was

the intellectual justification for the composite rate of tax on the interest paid by the trustee savings bank and similar institutions.
What price fiscal neutrality now? Where is the fiscal neutrality in charging tax on all interest received by savers and relieving income tax on dividends received by the same people if they put money into a personal equity plan rather than a trustee savings bank? No doubt the Chancellor will tell us later.
The one genuine tax concession for the individual taxpayer is the 1p off income tax. The arguments for and against this concession have all been rehearsed during our debates, and we all agree that it illustrates the differences between us. The Conservative party gives, and has always given, the greatest priority to tax cuts, by which it means cuts in the taxes on wealth and income, whereas the Labour party gives greater priority to an increase in public expenditure in order to extend and improve social services in the widest sense, to alleviate poverty in all its forms and above all to create jobs and reduce unemployment.
A Labour Government with £1 billion to spare would have used it differently. For example, to reduce the amount of income tax paid by people on low income, we would have preferred to raise the threshold for the basic rate of tax. To reduce the amount taken from people with the lowest wages, we would have preferred to raise the threshold for national insurance contributions. To have given the greatest help to people in greatest poverty, we would have preferred to increase pensions and child benefit.
As my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) explained last week, such measures would cost much more than £1 billion. We calculate that it would cost £3 billion to increase pensions and child benefit and extend the long-term rate for supplementary benefit to the long-term unemployed. We would get that money, not at the expense of the man and woman paying the standard rate of income tax, but by increasing the taxes paid by the richest 5 per cent. of society.

Mr. Nicholas Soames: Will the hon. Gentleman be voting against the cut in income tax?

Mr. Davis: I saw the hon. Gentleman receive that message from the Chancellor of the Exchequer a few moments ago via the Chancellor's PPS. We all know where the question came from, but I shall answer the Chancellor's question. We shall not be voting against the reduction in the standard rate of income tax. It would be strange if the Labour party voted against a reduction of 1p on the way towards a standard rate of income tax that existed when we left office. It was 25p, and is now 30p, so why should we vote against a slip back towards 25p? Anyway, we have made it clear that a cut in the standard rate of income tax will be of some benefit to those on the lowest wages who pay income tax. We do not deny that. It will provide a small amount. We are not going to set off the basic rate taxpayer against pensioners, parents and the long-term unemployed. We will get that money from the Chancellor's friends, the richest 5 per cent. of our society, those who have gained £3 billion a year. This Government have given that money to the rich not just in this Budget, but in all of their Budgets. That money has been given away in cuts not in the standard rate of income tax, but in the higher rates of income tax. It has been given away in


the abolition of the investment income surcharge and in cuts in capital gains tax. It has also been given away in cuts in capital transfer tax and now in the abolition of that tax. I have mentioned only the four biggest giveaways. That money has been given not to those on the lowest incomes who are in greatest need, but to those on the highest incomes with the least need.

Mr. Richard Page: Is the top rate of our income tax in line with the income tax rates paid in the EEC?

Mr. Davis: The hon. Gentleman has not been listening. I specifically referred not just to the higher rates of income tax but to the capital taxes. Those taxes have been cut and now abolished by this Government. That is the answer to Tory spokesmen such as the Chancellor of the Duchy of Lancaster, who has just drawn himself to my attention. The right hon. Gentleman claimed that the Labour party's programme would be financed only by increasing the standard rate of income tax or by increasing VAT. But I shall not take any lessons from the chairman of a party that nearly doubled VAT within six weeks of coming to office.
I think that the right hon. Member for Chingford (Mr. Tebbit) today made his first speech since returning to the House. On a personal level, we are all glad that he has returned. There is no Conservative Member who feels more strongly than my hon. Friends and I feel about the reasons for his temporary absence.

Mr. Tebbit: May I assume that Opposition Members will be voting in favour of the prevention of terrorism legislation next time?

Mr. Davis: I must also tell the right hon. Member for Chingford that on a political level his absence has not led us to regard him more fondly.
But our real quarrel with Conservative spokesmen is that they constantly refuse to acknowledge that the most valuable, expensive and far-reaching tax concessions introduced by the Conservative Government have been reductions in the tax paid by people with large amounts of capital and people with substantial incomes derived from that capital. Those are the people who have benefited most from the Government's tax cuts, and it is they who will pay more to finance the Labour Government's anti-poverty programme. That programme will involve at present an increase of £3 a week in child benefit for every child; an increase of £5 a week in real terms in the pension for a single person; an increase of £8 a week in the pension for a married couple; and the extension of the long-term rate of supplementary benefit to the long-term unemployed.
The biggest failure of this Government is their failure to reduce unemployment and all the Chancellor's cleverness and skill and ingenuity cannot hide that failure from the British people. Of course we welcome an extra £100 million for job creation schemes, but such a sum is totally inadequate when compared to what is needed. That is why my right hon. Friend the Member for Sparkbrook announced a package of measures with the aim of providing a million new jobs within two years.
I come to the question put to me by the hon. Member for Eastbourne (Mr. Gow) who quoted directly from Hansard of 19 March 1986. He quoted the question put by the hon. Member for Lewisham, West (Mr. Maples) at column 309. It is a pity that the hon. Member for

Eastbourne did not listen carefully to the answer given by my right hon. Friend the Member for Sparkbrook, or at least did not read on in Hansard. If he had read on to the next column he would have seen the answer to the question. I do not know whether the hon. Member for Eastbourne was absent from our proceedings when the question was answered, but he could have read it before he made his intervention.
That package announced by my right hon. Friend will add up to £6·8 billion, not the £24 billion proclaimed by the Chief Secretary.
This debate has been overshadowed by the Chief Secretary's claim to have costed the Labour programme at £24 billion, a claim echoed by the right hon. Member for Chingford. That total has been shown to be a fiction. It was calculated by civil servants acting as animated calculating machines and dutifully totting up the cost for a mixture of plans for immediate implementation, longterm commitments and Green Paper type proposals on which the Labour party is consulting.
It is quite clear from the records that the Chief Secretary had the nerve to send to us that it was a mixture collected, confused and even invented by the Chief Secretary. Worse still, even where the Chief Secretary is right in his claims and his costings, he fails to understand—and many would say that he does not want to understand—that any increase in public expenditure on housing, roads, education, the Health Service or on a community programme or on training for the unemployed, would also have the effect of reducing all those items of public expenditure that result from unemployment.
We have made the point before and I will make it again. The top priority of the next Labour Government will be a reduction in unemployment. That is why we will increase public expenditure. It will be done to reduce unemployment, but the creation of new jobs will not only do that: it will also reduce the cost of unemployment. It costs £6,000 a year for every person who is unemployed, and for every person helped to get back to work the Government will save £6,000. That money is now spent on unemployment, and it will become available for education and the arts and a better standard of living for all those people, from pensioners to students, who depend on the Government for their standard of living. That is not an increase in public expenditure: it is a redistribution of public expenditure and resources.
I do not expect the Chief Secretary to understand that because he does not understand the economy any more than the Chancellor understands industry. Look at them: a financial journalist and a merchant banker supported by an investment banker and another hon. Gentleman who simply calls himself "banker." None of them has ever been unemployed or has ever worked in industry. The only thing that has ever dirtied their hands is their own economic policy. They do not care about industry or unemployment or poverty. That is why they have produced a Budget that is irrelevant to the needs of the country, and that is why the Labour party opposes it.

The Chancellor of the Exchequer (Mr. Nigel Lawson): The one thing of which we are always sure when the hon. Member for Birmingham, Hodge Hill (Mr. Davis) winds up a debate is entertainment. What he says bears little relationship to the facts, but at least we get the entertainment. I am grateful to the hon. Gentleman for not


failing us this evening. He began his speech by saying that Britain was at the mercy of the middle east. The one thing that this Budget and the events that surrounded its conception has shown is, first, that events in the oil market have occurred not as a result of political actions by Governments in the middle east, but as a result of market forces asserting themselves against the political wishes of those in the middle east. Secondly, the events surrounding the Budget's conception have shown that our economic performance is in no way dependent on North sea oil. North sea oil is an important but marginal issue.
I should like to turn the point on which the hon. Member for Hodge Hill ended—the £24 billion programme which, as my right hon. Friend the Chief Secretary has rightly pointed out, is the sum to which the Labour party's commitments add up. [Interruption.] There is no point in the hon. Member for Hodge Hill muttering from a sedentary position that that is not true. During these debates, Labour Members announced not only the £3·6 billion programme for the relief of poverty but, on top of that, a £6·8 billion programme for jobs. We have been told that everything else is merely Green Paper conjecture for consultation. Is that really the case? Is the £1·3 billion, which the Labour party has said it will spend on education in various forms, merely a Green Paper type figure for consultation, or is it serious?

Mr. Terry Davis: rose—

Mr. Lawson: I shall give way in a moment. Is the £0·8 billion—

Mr. Davis: Will the right hon. Gentleman let me answer?

Mr. Lawson: In a moment. Is the £0·8 billion, which the Labour party has said is the extra amount it will spend on the Health Service, merely a Green Paper type speculation? Is the Labour party now resiling from the £1·1 billion extra which the Leader of the Opposition said would be spent on overseas aid? Is the Labour party now resiling from the extra £1 billion which the right hon. and learned Member for Monklands, East (Mr. Smith) said was for additional spending on industry? Which of those programmes is a commitment and from which does the Labour party resile?

Mr. Davis: If the Chancellor had sat through more of our debates he would have heard the truth about our promises on the education programme. He knows that the figures were invented by the Chief Secretary. There is a four letter word to describe that, which is not parliamentary language.

Mr. Lawson: On the contrary, the figure that I have cited has been amended as a result of the letter from the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). Will the hon. Member for Hodge Hill say whether the Labour party resiles from the figures on health, education, overseas aid and aid to industry?

Mr. Davis: The Chief Secretary invented pledges, costed them wrongly and refused to retract. Any other hon. Member would have apologised to the House. We now know that the figures really came from the Chancellor of the Exchequer. The Chief Secretary was merely his parrot.

Mr. Lawson: It is clear that the hon. Gentleman, speaking on behalf of the Opposition, has not resiled from those figures and that, therefore, the £24 billion still stands.
How will the Labour party pay for all those programmes? For a Chancellor of the Exchequer, when faced with questions of this kind—

Mr. Hoyle: On a point of order, Mr. Speaker. When will the Chancellor reply to the debate?

Mr. Speaker: The Chancellor has been speaking for about five minutes.

Mr. Lawson: I had no intention of going into these waters until these matters were raised by the hon. Member for Hodge Hill. I have to reply to his remarks.
How will the Labour party pay for all these programmes? When a Chancellor of the Exchequer has to be interrogated, he goes to the Select Committee on Treasury and Civil Service, and he is investigated by my right hon. Friend the Member for Worthing (Mr. Higgins) and other hon. Members. For a shadow spokesman on economic affairs, the equivalent of the Treasury and Civil Service Committee is Jimmy Young. Therefore, it is right that I should look to the transcript of the very important interview that the right hon. Member for Sparkbrook gave on the Jimmy Young programme on 20 March. This is very important, and the House ought to pay attention.
Mr. Young said:
Can I just ask you, I mean would what you get from the rich cover all the things that you want to do?
The right hon. Gentleman said:
It would more than cover it. Not the job programme, not the job programme. It would cover the pensions, the child benefit and the help to the long term unemployed. The very rich have got back about £3·64 billion and our anti-poverty programme, increasing the pension and so on, would cost about £3·5 billion.
Mr. Young said:
Can I just ask you; when you say rich, Roy, you mean who's rich? I mean what income are you talking about?
The right hon. Gentleman said:
It's people earning more than £25,000 a year … I don't think we should begrudge people their very high earnings, we just ought to face the fact that if you don't tax them properly, there are penalties.
Mr. Young asked:
Can I just get that one out of the way: when you say tax them properly, what sort of level would they be paying tax then, people on £25,000 a year?
The right hon. Gentleman replied:
The general income tax level wouldn't change very much, because our complaint is not about income tax, which ought not to return to what it was 10 years ago—98 per cent. on the marginal pound. I don't want income tax ever to get back to that level for £30,000, £40,000, £50,000.
Mr. Young then asked:
You wouldn't want it to get past what sort of level?
The right hon. Gentleman replied:
I wouldn't want to change income tax very much. What I would want to do is remove some of the other tax perks that they've been given; capital gains tax, capital transfer tax and particularly the tax on unearned income.
Let us look at that. There would be no change in income tax at all, or at least not very much, but changes in capital gains tax and capital transfer tax. Let us see what that adds up to. [Interruption.] The right hon. Member for Sparkbrook was able to make his speech in relative quiet. I hope that the same courtesy will be extended to me.
The reductions in CGT and CTT under the present Government have added up to £620 million. On top of that, the abolition of the investment income surcharge—


much of which went to people on the standard rate, not just to the wealthy—amounted to £740 million. So the total is £1·36 billion, or, even generously, only £1½ billion. I doubt very much, too, whether the right hon. Gentleman would be able to get that £1½ billion, because, as a result of the changes that we have made and the more benign climate for investment in this country, the yield on capital taxes since we have been in office has risen in real terms by more than 20 per cent. despite those reductions. Nevertheless, with that £1½ billion, the right hon. Gentleman would still be £2 billion short of his £3½ billion. Where would he find it? If he confined himself to those earning over £25,000, he would have to tax every single penny above £25,000 at 75 per cent. compared with the present starting point of 45 per cent. For the right hon. Gentleman to say that he would not change income tax very much is sheer humbug and hypocrisy, and he should know that that is not the case.
Furthermore, during the period that this Government have been in office, as a result of the benign climate that has been created, the share of total income tax paid by the top 5 per cent. has not fallen. It has risen from 24 per cent. of the total in 1978–79 to 27 per cent. of the total in the coming year. So much for the arithmetic of the right hon. Member for Sparkbrook.
The speech of the right hon. and learned Member for Monklands, East was one of the poorest speeches that he has made in this House for some considerable time. He claimed that manufacturing output stagnated in 1985. Manufacturing output rose in 1985 by 3 per cent., which was more than in any single year of the last Labour Government.
My right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) made a more substantial speech. I thank him for his support for the Budget. He and the right hon. Member for South Down (Mr. Powell) expressed opposing views about the desirability of joining the European monetary system. That is clearly an important issue, but I am afraid that I do not have time to go into the details of it tonight. However, I assure the House that we shall continue to keep it under close review.
The right hon. Member for South Down asked about the consequences that I expect to flow from the improvement in industry's success in the markets, both at home and overseas. One answer is more jobs, and I am sure that he will welcome that. However, I suspect that he was referring to the balance of payments. Another answer would be to offset the declining surplus in oil which is likely to occur on the overseas account.
My hon. Friend the Member for Croydon, South (Sir W. Clark) also supported the Budget. He queried to some extent the preference for the basic rate over thresholds. In this Parliament alone we have moved very substantially on tax thresholds. We have increased tax thresholds in real terms by more than 20 per cent. Most of that increase has been during the lifetime of this Parliament. Our thresholds are higher, as a proportion of average earnings, than those in Germany and the United States, whereas the starting point of our basic rate is higher than in almost any other country in the world. It is right that we should seek to bring it down, and I make no apology for saying that the long term aim of this Government is to get it down to 25 per cent.
My right hon. Friend the Member for Henley (Mr. Heseltine) spoke, in particular, about inner city deprivation. If there is one culprit responsible for the acute

problem of inner city deprivation, it is the public sector and the way in which local authorities have continually harassed businesses. It was necessary to create the urban development corporations, to which my right hon. Friend referred, in order to take power out of the hands of the local authorities in those areas.
On the whole, this Budget has been well received by the financial markets, as a result of which we have seen already a reduction of 1 per cent. in interest rates and a reduction in the mortgage rate. It has also been well received by industry, and not least by charities. I should like to say a word about charities. Some of the most important elements in the Budget were the measures that were introduced to encourage giving to charities and the charities themselves. I refer to the basic concession for corporate giving, the brand new concession for payroll giving by employees, the removal of the ceiling of £10,000 on covenants and the selection of value added tax reliefs. Certain abuses were also stopped. The Institute of Charity Fund-Raising Managers had this to say—[Interruption.] I am sorry that Opposition Members have no interest whatever in charitable giving. It is characteristic of them.

Mr. Bell: The reason why the Opposition have taken no interest in the subject until now is that the Chancellor has not alluded to the Budget. He has only now come to the Budget. We shall listen to him with interest.

Mr. Lawson: It is clear that the hon. Gentleman has not been listening. I am talking about an important section of the Budget at this moment—the concessions to charities. The Institute of Charity Fund-Raising Managers has said:
This is the most exciting and imaginative Budget for charities there has ever been.
The Charities Aid Foundation said it was
more radical and far-reaching than we could have hoped for.
The noble Lord Goodman, on behalf of charities concerned with the arts, said there was the
prospect of many good things to come, and come soon.
The Charities VAT Reform Group said the Budget had the "most substantial concessions ever." Mr. Brian Rix of MENCAP said he was "amazed and delighted" by the concessions.
The Budget reflects and seeks to promote the sort of society we wish to see. This is an exemplification of capitalism in the true sense—the voluntary aid secured from higher profits and higher incomes. It is popular capitalism, too. That has been the theme of the Government and of the Budget.
The Government believe in a society in which people own a stake in their own country and in its means of wealth creation. We are engaged in closing the divide between them and us. That is the true route to one nation. It began many years ago with the property owning democracy in terms of home ownership. That has been greatly extended under this Government as a result of the enfranchisement of council tenants. It has been further extended through employee share ownership.
When we came into office in 1979 there were merely 30 all-employee share schemes in operation under the Finance Act 1978. Through improvements of that Act and through the Finance Act 1980, enacted by my predecessor, we have today not 30 schemes, but well over 1,000 schemes, involving 1¼ million employees in all-employee share schemes. There are now 1,375 share option schemes in operation, and that scheme only started in 1984.
There are also workers' co-operatives—[Interruption.] I think that Labour Members are interested in worker co-operatives. When we took office the number of worker co-operatives in this country was 300. Today there are more than 1,200. [Interruption.] The Opposition may cheer, but when they were in office they merely talked about worker co-operatives. They never did anything about them.
The way in which we have pursued privatisation by giving preferential applications to small shareholders has more than doubled the number of individual shareholders in this country. Notably, of course, there is the British Telecom privatisation, which still has 1·6 million individual shareholders, many of them men and women who have never held a share before in their lives. That has opened up new horizons for more and more of our people.
Those horizons will be extended further by the personal equity plans announced in the Budget, which will come into force on 1 January after a period of consultation. Over time I believe that the new personal equity plans, which provide the possibility of investing small sums in equities year in, year out, totally free of all tax—tax on the dividends and on capital gains—will profoundly change the nature of our society. The people's capitalism is on the march, and there will be no stopping it. It will further foster the spirit of enterprise upon which economic success depends. [Interruption.] Opposition Members find it difficult to accept the fact that the British economy is doing very well.
We have a very important anniversary this year. It is the 10th anniversary of the flight from Manila in 1976. Unlike President Marcos, the right hon. Member for Leeds, East (Mr. Healey) had to flee from Manila before he had even reached it. He got only as far as London airport when he had to turn back. That was at a time when inflation was running at 26 per cent. The exchange rate had fallen by one quarter over the previous three years. This country's net overseas assets are now some £90 billion. At that time, they had fallen to £3 billion. The public sector borrowing requirement, which the right hon. Gentleman regarded in such a cavalier manner, was almost 10 per cent. of gross domestic product. In today's money, that is £33 billion. That is precisely what he would like to see again. The result was collapse, ignominy and going cap in hand to the International Monetary Fund, and the then Labour Government had to have an about turn of their policies.
Let us contrast the situation today. Inflation is at 5 per cent., which is the average since the last election, and we are heading for 3·5 per cent. by the end of this year. We have a growth rate of 3 per cent. We have had 3 per cent. a year steadily since the last general election — [Interruption.] Yes, since the general election in 1983 it has been steadily 3 per cent. The right hon. and learned Member for Monklands, East does not even know when the last general election was. I am not surprised. He had to obliterate it from his mind because his party was practically obliterated, too. Our growth rate is 3 per cent., and the prospect is the best for a generation. Indeed, in international competitiveness since 1979—

Mr. Andrew Faulds: Will the right hon. Gentleman give way?

Mr. Lawson: I do not have the time.

Mr. Faulds: rose—

Mr. Lawson: All right. I shall give way in a moment.
The right hon. and learned Member for Monklands, East invited me to make a comparison with 1979. I shall do so. Since 1979, we have grown to the same extent as France and Germany, whereas under the Labour Government we grew very much less. Indeed, in no other six-year period since the war has our relative performance compared with our European competitors been as good as it has been since 1979.

Mr. Faulds: Will the right hon. Gentleman be charitable enough to his private office to admit that he wrote this rubbish?

Mr. Lawson: I am sorry that I gave way to the hon. Gentleman.
Our cumulative surplus on the balance of payments has been more than £20 billion over that period.
The right hon. and learned Member for Monklands, East spent a great deal of time talking about manufacturing industry. It is right that I should reply. To do him credit, I think that he has been talking about it for a little while. The Leader of the Opposition speaks with the excessive enthusiasm of someone who has only just discovered its very existence.
The plain fact is that the environment for manufacturing today is better than it has been for a very long time. We have lower oil prices. The reduction in the fuel bill so far is worth over £1 billion to manufacturing industry. Mind you, Mr. Speaker, Labour Members want to take that away. Despite their professed concern for manufacturing industry, they are recommending that we should enter into talks with the Organisation of Petroleum Exporting Countries to ensure that the oil price is higher than it is now. That is what was said by the hon. Member for Thurrock (Dr. McDonald) on behalf of the Opposition. I hope that Labour Members will tell manufacturing industry how much higher they would like oil prices to be—[Interruption.] We have a lower exchange rate against both Germany and Japan, our principal competitors, and, of course, lower inflation. That does not normally happen when the exchange rate is coming down. Inflation is also coming down sharply. This is an unparalleled opportunity for British industry in general and for manufacturing industry in particular, at a time when we are holding our share of world markets. Between 1981 and 1985 inclusive we have seen the best five-year period in recent history for maintaining our share of world markets.

Dr. M. S. Miller: Will the right hon. Gentleman give way?

Mr. Lawson: I shall not give way. I have given way a great deal.
Although there has been some decline since 1979 in the share of world trade in manufacturing, our share of world trade has declined very much less than that of France and Germany since 1979. Manufacturing profitability is the highest since 1973. It is from that manufacturing profitability that the resources come for more spending on training and research and development. Of course, I welcome the emphasis that was laid on that, echoing what I said in my Budget speech. Under the Labour Government, the profits were not there and industry was


unable to make that expenditure. Now that the opportunity is there, I hope that industry will take it. As to unemployment—

Dr. M. S. Miller: Will the Chancellor answer a question which is puzzling the nation? If things are so good, why are things so bad?

Mr. Lawson: I assume that the hon. Member is referring to unemployment, which, of course, is bad. We have never sought to disguise the fact that unemployment is bad. It is odd that the Opposition seek to deny what is good in terms of productivity, output, inflation, profitability, overall investment and exports. All these are good. Over a number of years we have introduced special measures to help the unemployed. We announced more this year. In addition—

Mr. John Smith: Will the right hon. Gentleman give way?

Mr. Lawson: No.
In addition to that, a number of measures are specially designed to encourage small and new businesses which are particularly important for the future of employment. I refer to the improved loan guarantee scheme, the improvement in the business expansion scheme and the improvement on capital transfer tax. The most crippling burden on small and family businesses was capital transfer tax.
None of those measures will reduce unemployment in the way that hon. Members on both sides of the House would like, unless there is a slower growth in unit labour costs. Many of my hon. Friends rightly referred to that. There is no getting away from the fact that we shall not achieve the lower unemployment that we all seek unless unit labour costs rise at a slower rate than among our competitors. That is why, to encourage flexibility in the labour market, I made the profit sharing proposal in the Budget so that a proportion of remuneration related to company profits might receive a tax concession. I am encouraged by the early signs of a positive response. But that is in the long term. In the short term business must take control of its own labour costs. The only solution to unemployment is a more effective, efficient and dynamic economy.
The most favourable climate for industry is the most favourable climate for jobs. There is no way round achieving a better climate for jobs other than by achieving a better climate for industry.
Since the last general election we have seen inflation averaging 5 per cent. and growth averaging 3 per cent.—the best combination for a generation. We have seen manufacturing output average 4 per cent. growth a year, manufacturing productivity average 4¾ per cent. a year, employment rise at a rate of over 750,000 a year, non-oil exports grow at 4½ per cent. a year and real take-home pay at 2½ per cent. a year.
Not only has our position been better than under many previous Governments for a very long time, but, even if one takes the period from 1979, our relative position has improved considerably. We have not yet made as much progress with inflation as we should like, but we are making progress and I forecast that it will be 3½ per cent. by the end of this year. Since we have been in office, inflation has been 1 per cent. higher than the OECD average. But when the Labour party was in power inflation

was 6 per cent. higher than the OECD average. That is another measure of the improvement in comparative terms as well as in absolute terms.
The Budget which I introduced on Tuesday is a Budget for the whole of the people. It is a Budget that will continue to build on the success of our previous Budgets. It is a Budget that will encourage the spread of wider share ownership and popular capitalism and I commend it to the House.

Question put:—

The House divided: Ayes 353, Noes 212.

Division No. 111]
[10 pm


AYES


Adley, Robert
Clark, Sir W. (Croydon S)


Aitken, Jonathan
Clarke, Rt Hon K. (Rushcliffe)


Alexander, Richard
Cockeram, Eric


Alison, Rt Hon Michael
Colvin, Michael


Amess, David
Conway, Derek


Ancram, Michael
Coombs, Simon


Arnold, Tom
Cope, John


Ashby, David
Cormack, Patrick


Aspinwall, Jack
Corrie, John


Atkins, Rt Hon Sir H.
Couchman, James


Atkins, Robert (South Ribble)
Cranborne, Viscount


Atkinson, David (B'm'th E)
Critchley, Julian


Baker, Rt Hon K. (Mole Vall'y)
Crouch, David


Baker, Nicholas (Dorset N)
Currie, Mrs Edwina


Baldry, Tony
Dickens, Geoffrey


Banks, Robert (Harrogate)
Dorrell, Stephen


Batiste, Spencer
Dover, Den


Beaumont-Dark, Anthony
du Cann, Rt Hon Sir Edward


Bellingham, Henry
Dunn, Robert


Bendall, Vivian
Durant, Tony


Bennett, Rt Hon Sir Frederic
Dykes, Hugh


Benyon, William
Edwards, Rt Hon N. (P'broke)


Best, Keith
Eggar, Tim


Bevan, David Gilroy
Emery, Sir Peter


Biffen, Rt Hon John
Evennett, David


Biggs-Davison, Sir John
Fallon, Michael


Blackburn, John
Farr, Sir John


Blaker, Rt Hon Sir Peter
Favell, Anthony


Body, Sir Richard
Fenner, Mrs Peggy


Bonsor, Sir Nicholas
Finsberg, Sir Geoffrey


Bottomley, Peter
Fletcher, Alexander


Bottomley, Mrs Virginia
Fookes, Miss Janet


Bowden, A. (Brighton K'to'n)
Forman, Nigel


Bowden, Gerald (Dulwich)
Forsyth, Michael (Stirling)


Boyson, Dr Rhodes
Forth, Eric


Braine, Rt Hon Sir Bernard
Fowler, Rt Hon Norman


Brandon-Bravo, Martin
Fox, Marcus


Bright, Graham
Franks, Cecil


Brinton, Tim
Fraser, Peter (Angus East)


Brittan, Rt Hon Leon
Freeman, Roger


Brooke, Hon Peter
Fry, Peter


Brown, M. (Brigg &amp; Cl'thpes)
Gale, Roger


Browne, John
Galley, Roy


Bruinvels, Peter
Gardiner, George (Reigate)


Bryan, Sir Paul
Gardner, Sir Edward (Fylde)


Buchanan-Smith, Rt Hon A.
Gilmour, Rt Hon Sir Ian


Buck, Sir Antony
Glyn, Dr Alan


Budgen, Nick
Goodhart, Sir Philip


Burt, Alistair
Goodlad, Alastair


Butcher, John
Gorst, John


Butler, Rt Hon Sir Adam
Gow, Ian


Butterfill, John
Gower, Sir Raymond


Carlisle, John (Luton N)
Grant, Sir Anthony


Carlisle, Kenneth (Lincoln)
Greenway, Harry


Carlisle, Rt Hon M. (W'ton S)
Gregory, Conal


Carttiss, Michael
Griffiths, Sir Eldon


Cash, William
Griffiths, Peter (Portsm'th N)


Chalker, Mrs Lynda
Grist, Ian


Channon, Rt Hon Paul
Ground, Patrick


Chapman, Sydney
Grylls, Michael


Chope, Christopher
Hamilton, Hon A. (Epsom)


Clark, Hon A. (Plym'th S'n)
Hampson, Dr Keith


Clark, Dr Michael (Rochford)
Hanley, Jeremy






Hannam, John
Marshall, Michael (Arundel)


Hargreaves, Kenneth
Mates, Michael


Harris, David
Maude, Hon Francis


Harvey, Robert
Mawhinney, Dr Brian


Hawkins, C. (High Peak)
Maxwell-Hyslop, Robin


Hawksley, Warren
Mayhew, Sir Patrick


Hayhoe, Rt Hon Barney
Meyer, Sir Anthony


Hayward, Robert
Miller, Hal (B'grove)


Heath, Rt Hon Edward
Mills, Iain (Meriden)


Heathcoat-Amory, David
Miscampbell, Norman


Heddle, John
Mitchell, David (Hants NW)


Henderson, Barry
Moate, Roger


Heseltine, Rt Hon Michael
Monro, Sir Hector


Hickmet, Richard
Montgomery, Sir Fergus


Higgins, Rt Hon Terence L.
Moore, Rt Hon John


Hill, James
Morris, M. (N'hampton S)


Hind, Kenneth
Morrison, Hon C. (Devizes)


Hirst, Michael
Morrison, Hon P. (Chester)


Hogg, Hon Douglas (Gr'th'm)
Moynihan, Hon C.


Holland, Sir Philip (Gedling)
Mudd, David


Holt, Richard
Neale, Gerrard


Hordern, Sir Peter
Nelson, Anthony


Howard, Michael
Neubert, Michael


Howarth, Alan (Stratf'd-on-A)
Newton, Tony


Howarth, Gerald (Cannock)
Nicholls, Patrick


Howell, Rt Hon D. (G'ldford)
Normanton, Tom


Howell, Ralph (Norfolk, N)
Norris, Steven


Hubbard-Miles, Peter
Onslow, Cranley


Hunt, David (Wirral W)
Oppenheim, Phillip


Hunt, John (Ravensbourne)
Oppenheim, Rt Hon Mrs S.


Hunter, Andrew
Osborn, Sir John


Hurd, Rt Hon Douglas
Ottaway, Richard


Jackson, Robert
Page, Richard (Herts SW)


Jenkin, Rt Hon Patrick
Parkinson, Rt Hon Cecil


Jessel, Toby
Parris, Matthew


Johnson Smith, Sir Geoffrey
Patten, Christopher (Bath)


Jones, Gwilym (Cardiff N)
Patten, J. (Oxf W &amp; Abgdn)


Jones, Robert (Herts W)
Pattie, Geoffrey


Joseph, Rt Hon Sir Keith
Pawsey, James


Kellett-Bowman, Mrs Elaine
Peacock, Mrs Elizabeth


Kershaw, Sir Anthony
Percival, Rt Hon Sir Ian


Key, Robert
Porter, Barry


King, Roger (B'ham N'field)
Portillo, Michael


Knight, Greg (Derby N)
Powell, William (Corby)


Knowles, Michael
Powley, John


Knox, David
Prentice, Rt Hon Reg


Lamont, Norman
Price, Sir David


Lang, Ian
Prior, Rt Hon James


Latham, Michael
Pym, Rt Hon Francis


Lawler, Geoffrey
Raffan, Keith


Lawrence, Ivan
Raison, Rt Hon Timothy


Lawson, Rt Hon Nigel
Rathbone, Tim


Lee, John (Pendle)
Rees, Rt Hon Peter (Dover)


Lennox-Boyd, Hon Mark
Renton, Tim


Lester, Jim
Rhodes James, Robert


Lewis, Sir Kenneth (Stamf'd)
Rhys Williams, Sir Brandon


Lightbown, David
Ridley, Rt Hon Nicholas


Lilley, Peter
Ridsdale, Sir Julian


Lloyd, Ian (Havant)
Rifkind, Rt Hon Malcolm


Lloyd, Peter (Fareham)
Rippon, Rt Hon Geoffrey


Lord, Michael
Roberts, Wyn (Conwy)


Luce, Rt Hon Richard
Robinson, Mark (N'port W)


Lyell, Nicholas
Roe, Mrs Marion


McCrindle, Robert
Rossi, Sir Hugh


McCurley, Mrs Anna
Rost, Peter


Macfarlane, Neil
Rowe, Andrew


MacGregor, Rt Hon John
Rumbold, Mrs Angela


MacKay, Andrew (Berkshire)
Ryder, Richard


MacKay, John (Argyll &amp; Bute)
Sackville, Hon Thomas


Maclean, David John
Sainsbury, Hon Timothy


McNair-Wilson, M. (N'bury)
St. John-Stevas, Rt Hon N.


McNair-Wilson, P. (New F'st)
Sayeed, Jonathan


McQuarrie, Albert
Shaw, Giles (Pudsey)


Madel, David
Shaw, Sir Michael (Scarb')


Major, John
Shelton, William (Streatham)


Malins, Humfrey
Shepherd, Colin (Hereford)


Malone, Gerald
Shepherd, Richard (Aldridge)


Maples, John
Shersby, Michael


Marland, Paul
Silvester, Fred


Marlow, Antony
Sims, Roger





Skeet, Sir Trevor
van Straubenzee, Sir W.


Smith, Sir Dudley (Warwick)
Vaughan, Sir Gerard


Smith, Tim (Beaconsfield)
Viggers, Peter


Soames, Hon Nicholas
Waddington, David


Speller, Tony
Wakeham, Rt Hon John


Spencer, Derek
Waldegrave, Hon William


Spicer, Jim (Dorset W)
Walden, George


Spicer, Michael (S Worcs)
Walker, Bill (T'side N)


Squire, Robin
Walker, Rt Hon P. (W'cester)


Stanbrook, Ivor
Wall, Sir Patrick


Stanley, Rt Hon John
Waller, Gary


Steen, Anthony
Walters, Dennis


Stern, Michael
Wardle, C. (Bexhill)


Stevens, Lewis (Nuneaton)
Warren, Kenneth


Stewart, Allan (Eastwood)
Watson, John


Stewart, Andrew (Sherwood)
Watts, John


Stewart, Ian (Hertf'dshire N)
Wells, Bowen (Hertford)


Stokes, John
Wells, Sir John (Maidstone)


Stradling Thomas, Sir John
Wheeler, John


Sumberg, David
Whitfield, John


Tapsell, Sir Peter
Whitney, Raymond


Taylor, John (Solihull)
Wiggin, Jerry


Tebbit, Rt Hon Norman
Wilkinson, John


Temple-Morris, Peter
Winterton, Mrs Ann


Thatcher, Rt Hon Mrs M.
Winterton, Nicholas


Thomas, Rt Hon Peter
Wolfson, Mark


Thompson, Donald (Calder V)
Wood, Timothy


Thompson, Patrick (N'ich N)
Woodcock, Michael


Thornton, Malcolm
Yeo, Tim


Thurnham, Peter
Young, Sir George (Acton)


Townend, John (Bridlington)
Younger, Rt Hon George


Townsend, Cyril D. (B'heath)



Tracey, Richard
Tellers for the Ayes:


Trippier, David
Mr. Carol Mather and


Trotter, Neville
Mr. Robert Boscawen.


Twinn, Dr Ian





NOES


Abse, Leo
Cohen, Harry


Adams, Allen (Paisley N)
Conlan, Bernard


Alton, David
Cook, Frank (Stockton North)


Anderson, Donald
Cook, Robin F. (Livingston)


Archer, Rt Hon Peter
Corbett, Robin


Ashdown, Paddy
Corbyn, Jeremy


Ashley, Rt Hon Jack
Craigen, J. M.


Ashton, Joe
Crowther, Stan


Atkinson, N. (Tottenham)
Cunliffe, Lawrence


Bagier, Gordon A. T.
Cunningham, Dr John


Banks, Tony (Newham NW)
Davies, Rt Hon Denzil (L'lli)


Barnett, Guy
Davies, Ronald (Caerphilly)


Barron, Kevin
Davis, Terry (B'ham, H'ge H'l)


Beckett, Mrs Margaret
Deakins, Eric


Beith, A. J.
Dewar, Donald


Bell, Stuart
Dixon, Donald


Benn, Rt Hon Tony
Dormand, Jack


Bennett, A. (Dent'n &amp; Red'sh)
Douglas, Dick


Bermingham, Gerald
Dubs, Alfred


Bidwell, Sydney
Duffy, A. E. P.


Blair, Anthony
Dunwoody, Hon Mrs G.


Boothroyd, Miss Betty
Eadie, Alex


Boyes, Roland
Eastham, Ken


Bray, Dr Jeremy
Edwards, Bob (W'h'mpt'n SE)


Brown, Gordon (D'f'mline E)
Evans, John (St. Helens N)


Brown, N. (N'c'tle-u-Tyne E)
Ewing, Harry


Brown, Ron (E'burgh, Leith)
Fatchett, Derek


Bruce, Malcolm
Faulds, Andrew


Buchan, Norman
Field, Frank (Birkenhead)


Caborn, Richard
Fields, T. (L'pool Broad Gn)


Callaghan, Rt Hon J.
Fisher, Mark


Callaghan, Jim (Heyw'd &amp; M)
Flannery, Martin


Campbell-Savours, Dale
Foot, Rt Hon Michael


Canavan, Dennis
Foster, Derek


Carlile, Alexander (Montg'y)
Foulkes, George


Carter-Jones, Lewis
Fraser, J. (Norwood)


Clark, Dr David (S Shields)
Freeson, Rt Hon Reginald


Clarke, Thomas
Freud, Clement


Clay, Robert
Garrett, W. E.


Clelland, David Gordon
Godman, Dr Norman


Clwyd, Mrs Ann
Golding, John


Cocks, Rt Hon M. (Bristol S)
Gould, Bryan






Gourlay, Harry
O'Brien, William


Hamilton, James (M'well N)
O'Neill, Martin


Hamilton, W. W. (Fife Central)
Orme, Rt Hon Stanley


Hancock, Michael
Owen, Rt Hon Dr David


Hardy, Peter
Park, George


Harman, Ms Harriet
Parry, Robert


Harrison, Rt Hon Walter
Patchett, Terry


Hart, Rt Hon Dame Judith
Pavitt, Laurie


Hattersley, Rt Hon Roy
Pendry, Tom


Haynes, Frank
Penhaligon, David


Healey, Rt Hon Denis
Pike, Peter


Heffer, Eric S.
Powell, Raymond (Ogmore)


Hogg, N. (C'nauld &amp; Kilsyth)
Prescott, John


Holland, Stuart (Vauxhall)
Radice, Giles


Home Robertson, John
Redmond, Martin


Howells, Geraint
Rees, Rt Hon M. (Leeds S)


Hoyle, Douglas
Richardson, Ms Jo


Hughes, Dr Mark (Durham)
Roberts, Allan (Bootle)


Hughes, Robert (Aberdeen N)
Robertson, George


Hughes, Roy (Newport East)
Robinson, G. (Coventry NW)


Hughes, Sean (Knowsley S)
Rogers, Allan


Hughes, Simon (Southwark)
Rooker, J. W.


Janner, Hon Greville
Ross, Ernest (Dundee W)


Jenkins, Rt Hon Roy (Hillh'd)
Rowlands, Ted


John, Brynmor
Ryman, John


Johnston, Sir Russell
Sedgemore, Brian


Jones, Barry (Alyn &amp; Deeside)
Sheerman, Barry


Kaufman, Rt Hon Gerald
Sheldon, Rt Hon R.


Kennedy, Charles
Shore, Rt Hon Peter


Kilroy-Silk, Robert
Short, Ms Clare (Ladywood)


Kinnock, Rt Hon Neil
Short, Mrs R.(W'hampt'n NE)


Kirkwood, Archy
Silkin, Rt Hon J.


Lambie, David
Skinner, Dennis


Lamond, James
Smith, C.(Isl'ton S &amp; F'bury)


Leadbitter, Ted
Smith, Rt Hon J. (M'ds E)


Leighton, Ronald
Snape, Peter


Litherland, Robert
Soley, Clive


Livsey, Richard
Spearing, Nigel


Lloyd, Tony (Stretford)
Steel, Rt Hon David


Lofthouse, Geoffrey
Stewart, Rt Hon D. (W Isles)


McCartney, Hugh
Stott, Roger


McDonald, Dr Oonagh
Strang, Gavin


McGuire, Michael
Straw, Jack


McKelvey, William
Thomas, Dafydd (Merioneth)


MacKenzie, Rt Hon Gregor
Thomas, Dr R. (Carmarthen)


Maclennan, Robert
Thompson, J. (Wansbeck)


McNamara, Kevin
Thorne, Stan (Preston)


McTaggart, Robert
Tinn, James


Madden, Max
Torney, Tom


Marek, Dr John
Wainwright, R.


Marshall, David (Shettleston)
Wallace, James


Martin, Michael
Wardell, Gareth (Gower)


Mason, Rt Hon Roy
Wareing, Robert


Maxton, John
Weetch, Ken


Maynard, Miss Joan
Welsh, Michael


Meacher, Michael
White, James


Meadowcroft, Michael
Wigley, Dafydd


Michie, William
Williams, Rt Hon A.


Mikardo, Ian
Wilson, Gordon


Millan, Rt Hon Bruce
Winnick, David


Miller, Dr M. S. (E Kilbride)
Wrigglesworth, Ian


Mitchell, Austin (G't Grimsby)
Young, David (Bolton SE)


Morris,Rt Hon A. (W'shawe)



Morris, Rt Hon J. (Aberavon)
Tellers for the Noes:


Nellist, David
Mr. Allen MacKay and


Oakes, Rt Hon Gordon
Mr. John McWilliam.

Question accordingly agreed to.

Resolved,
That it is expedient to amend the law with respect to the National Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

(d) for any relief other than relief applying to goods of whatever description or services of whatever description.

Mr. Speaker: I am now required under Standing Order No. 114 to put successively, without further debate, the Questions on each of the Ways and Means motions Nos. 2 to 41 and the motion of procedure, on all of which the Finance Bill is to be brought in. Instead of reading out all of the motions in full, I propose to follow the procedure used in recent years; that is to say, I shall first state the title of the motion and then put the Question that the motion be agreed to.

2. TOBACCO PRODUCTS

Resolved,
That, as from 21st March 1986, the rates of duty on cigarettes and hand-rolling tobacco specified in Schedule 1 to the Tobacco Products Duty Act 1979 shall be increased—

(a) in the case of cigarettes, to an amount equal to 21 per cent. of the retail price plus £30·61 per thousand cigarettes; and
(b) in the case of hand-rolling tobacco, to £49·64 per kilogram:

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

3. HYDROCARBON OIL

Question put,

That, as from 6 o'clock in the evening of 18th March 1986—

(1) the rates of duty specified in section 6(1) of the Hydrocarbon Oil Duties Act 1979 shall be increased—

(a) in the case of light oil, from £0·1794 a litre to £0·1938 a litre; and
(b) in the case of heavy oil, from £0·1515 a litre to £0·1639 a litre; and

(2) in subsection (1) of section 11 of that Act (rebate on heavy oil) for paragraphs (a) and (b) there shall be substituted—

"(a) in the case of fuel oil, of £0·0077 a litre less than the rate at which the duty is for the time being chargeable;
(b) in the case of gas oil, of £0·0110 a litre less than the rate at which the duty is for the time being chargeable; and
(c) in the case of heavy oil other than fuel oil and gas oil, equal to the rate at which the duty is for the time being chargeable"; and

(3) for subsection (2) of section 11 of that Act (definition of types of heavy oil) there shall be substituted—

"(2) In this section—
'fuel oil' means heavy oil which contains in solution an amount of asphaltenes of not less than 0·5 per cent. or which contains less than 0·5 per cent. but not less than 0·1 per cent. of asphaltenes and has a closed flash point not exceeding 150°C; and
'gas oil' means heavy oil of which not more than 50 per cent. by volume distils at a temperature not exceeding 240°C arid of which more than 50 per cent. by volume distils at a temperature not exceeding 340°C":

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

The House divided: Ayes 351, Noes 207.

Division No. 112]
[10.15 pm


AYES


Adley, Robert
Aspinwall, Jack


Aitken, Jonathan
Atkins, Rt Hon Sir H.


Alexander, Richard
Atkins, Robert (South Ribble)


Alison, Rt Hon Michael
Atkinson, David (B'm'th E)


Amess, David
Baker, Rt Hon K. (Mole Vall'y)


Ancram, Michael
Baker, Nicholas (Dorset N)


Arnold, Tom
Baldry, Tony


Ashby, David
Banks, Robert (Harrogate)






Batiste, Spencer
Forth, Eric


Beaumont-Dark, Anthony
Fowler, Rt Hon Norman


Bellingham, Henry
Fox, Marcus


Bendall, Vivian
Franks, Cecil


Bennett, Rt Hon Sir Frederic
Fraser, Peter (Angus East)


Benyon, William
Freeman, Roger


Best, Keith
Fry, Peter


Bevan, David Gilroy
Gale, Roger


Biffen, Rt Hon John
Galley, Roy


Biggs-Davison, Sir John
Gardiner, George (Reigate)


Blackburn, John
Gardner, Sir Edward (Fylde)


Blaker, Rt Hon Sir Peter
Gilmour, Rt Hon Sir Ian


Body, Sir Richard
Glyn, Dr Alan


Bonsor, Sir Nicholas
Goodhart, Sir Philip


Bottomley, Peter
Goodlad, Alastair


Bottomley, Mrs Virginia
Gorst, John


Bowden, A. (Brighton K'to'n)
Gow, Ian


Bowden, Gerald (Dulwich)
Gower, Sir Raymond


Boyson, Dr Rhodes
Grant, Sir Anthony


Braine, Rt Hon Sir Bernard
Greenway, Harry


Brandon-Bravo, Martin
Gregory, Conal


Bright, Graham
Griffiths, Sir Eldon


Brinton, Tim
Griffiths, Peter (Portsm'th N)


Brittan, Rt Hon Leon
Grist, Ian


Brooke, Hon Peter
Ground, Patrick


Brown, M. (Brigg &amp; Cl'thpes)
Grylls, Michael


Browne, John
Hamilton, Hon A. (Epsom)


Bruinvels, Peter
Hampson, Dr Keith


Buchanan-Smith, Rt Hon A.
Hanley, Jeremy


Buck, Sir Antony
Hannam, John


Budgen, Nick
Hargreaves, Kenneth


Burt, Alistair
Harris, David


Butcher, John
Harvey, Robert


Butler, Rt Hon Sir Adam
Hawkins, C. (High Peak)


Butterfill, John
Hawksley, Warren


Carlisle, John (Luton N)
Hayhoe, Rt Hon Barney


Carlisle, Kenneth (Lincoln)
Hayward, Robert


Carlisle, Rt Hon M. (W'ton S)
Heath, Rt Hon Edward


Carttiss, Michael
Heathcoat-Amory, David


Cash, William
Heddle, John


Chalker, Mrs Lynda
Henderson, Barry


Channon, Rt Hon Paul
Heseltine, Rt Hon Michael


Chapman, Sydney
Hickmet, Richard


Chope, Christopher
Higgins, Rt Hon Terence L.


Clark, Hon A. (Plym'th S'n)
Hill, James


Clark, Dr Michael (Rochford)
Hind, Kenneth


Clark, Sir W. (Croydon S)
Hirst, Michael


Clarke, Rt Hon K. (Rushcliffe)
Hogg, Hon Douglas (Gr'th'm)


Cockeram, Eric
Holland, Sir Philip (Gedling)


Colvin, Michael
Holt, Richard


Conway, Derek
Hordern, Sir Peter


Coombs, Simon
Howard, Michael


Cope, John
Howarth, Alan (Stratf'd-on-A)


Cormack, Patrick
Howarth, Gerald (Cannock)


Corrie, John
Howell, Rt Hon D. (G'ldford)


Couchman, James
Howell, Ralph (Norfolk, N)


Cranborne, Viscount
Hubbard-Miles, Peter


Critchley, Julian
Hunt, David (Wirral W)


Crouch, David
Hunt, John (Ravensbourne)


Currie, Mrs Edwina
Hunter, Andrew


Dickens, Geoffrey
Hurd, Rt Hon Douglas


Dorrell, Stephen
Jackson, Robert


Dover, Den
Jenkin, Rt Hon Patrick


du Cann, Rt Hon Sir Edward
Jessel, Toby


Dunn, Robert
Johnson Smith, Sir Geoffrey


Durant, Tony
Jones, Gwilym (Cardiff N)


Dykes, Hugh
Jones, Robert (Herts W)


Edwards, Rt Hon N. (P'broke)
Joseph, Rt Hon Sir Keith


Eggar, Tim
Kellett-Bowman, Mrs Elaine


Emery, Sir Peter
Kershaw, Sir Anthony


Evennett, David
Key, Robert


Fallon, Michael
King, Roger (B'ham N'field)


Farr, Sir John
Knight, Greg (Derby N)


Favell, Anthony
Knowles, Michael


Fenner, Mrs Peggy
Knox, David


Finsberg, Sir Geoffrey
Lamont, Norman


Fletcher, Alexander
Lang, Ian


Fookes, Miss Janet
Latham, Michael


Forman, Nigel
Lawler, Geoffrey


Forsyth, Michael (Stirling)
Lawrence, Ivan





Lawson, Rt Hon Nigel
Rathbone, Tim


Lee, John (Pendle)
Rees, Rt Hon Peter (Dover)


Lennox-Boyd, Hon Mark
Renton, Tim


Lester, Jim
Rhodes James, Robert


Lewis, Sir Kenneth (Stamf'd)
Rhys Williams, Sir Brandon


Lightbown, David
Ridley, Rt Hon Nicholas


Lilley, Peter
Ridsdale, Sir Julian


Lloyd, Ian (Havant)
Rifkind, Rt Hon Malcolm


Lloyd, Peter (Fareham)
Rippon, Rt Hon Geoffrey


Lord, Michael
Roberts, Wyn (Conwy)


Luce, Rt Hon Richard
Robinson, Mark (N'port W)


Lyell, Nicholas
Roe, Mrs Marion


McCrindle, Robert
Rossi, Sir Hugh


McCurley, Mrs Anna
Rost, Peter


Macfarlane, Neil
Rowe, Andrew


MacGregor, Rt Hon John
Rumbold, Mrs Angela


MacKay, Andrew (Berkshire)
Ryder, Richard


MacKay, John (Argyll &amp; Bute)
Sackville, Hon Thomas


Maclean, David John
Sainsbury, Hon Timothy


McNair-Wilson, M. (N'bury)
St. John-Stevas, Rt Hon N.


McNair-Wilson, P. (New F'st)
Sayeed, Jonathan


McQuarrie, Albert
Shaw, Giles (Pudsey)


Madel, David
Shaw, Sir Michael (Scarb')


Major, John
Shepherd, Colin (Hereford)


Malins, Humfrey
Shepherd, Richard (Aldridge)


Malone, Gerald
Shersby, Michael


Maples, John
Silvester, Fred


Marland, Paul
Sims, Roger


Marlow, Antony
Skeet, Sir Trevor


Marshall, Michael (Arundel)
Smith, Sir Dudley (Warwick)


Mates, Michael
Smith, Tim (Beaconsfield)


Maude, Hon Francis
Soames, Hon Nicholas


Mawhinney, Dr Brian
Speller, Tony


Maxwell-Hyslop, Robin
Spencer, Derek


Mayhew, Sir Patrick
Spicer, Jim (Dorset W)


Meyer, Sir Anthony
Spicer, Michael (S Worcs)


Miller, Hal (B'grove)
Squire, Robin


Mills, Iain (Meriden)
Stanbrook, Ivor


Miscampbell, Norman
Stanley, Rt Hon John


Mitchell, David (Hants NW)
Steen, Anthony


Moate, Roger
Stern, Michael


Monro, Sir Hector
Stevens, Lewis (Nuneaton)


Montgomery, Sir Fergus
Stewart, Allan (Eastwood)


Moore, Rt Hon John
Stewart, Andrew (Sherwood)


Morris, M. (N'hampton S)
Stewart, Ian (Hertf'dshire N)


Morrison, Hon C. (Devizes)
Stokes, John


Morrison, Hon P. (Chester)
Stradling Thomas, Sir John


Moynihan, Hon C.
Sumberg, David


Mudd, David
Tapsell, Sir Peter


Neale, Gerrard
Taylor, John (Solihull)


Nelson, Anthony
Tebbit, Rt Hon Norman


Neubert, Michael
Temple-Morris, Peter


Newton, Tony
Thatcher, Rt Hon Mrs M.


Nicholls, Patrick
Thomas, Rt Hon Peter


Normanton, Tom
Thompson, Donald (Calder V)


Norris, Steven
Thompson, Patrick (N'ich N)


Onslow, Cranley
Thornton, Malcolm


Oppenheim, Phillip
Thurnham, Peter


Oppenheim, Rt Hon Mrs S.
Townend, John (Bridlington)


Osborn, Sir John
Townsend, Cyril D. (B'heath)


Ottaway, Richard
Tracey, Richard


Page, Richard (Herts SW)
Trippier, David


Parkinson, Rt Hon Cecil
Trotter, Neville


Parris, Matthew
Twinn, Dr Ian


Patten, Christopher (Bath)
van Straubenzee, Sir W.


Patten, J. (Oxf W &amp; Abgdn)
Vaughan, Sir Gerard


Pattie, Geoffrey
Viggers, Peter


Pawsey, James
Waddington, David


Peacock, Mrs Elizabeth
Wakeham, Rt Hon John


Percival, Rt Hon Sir Ian
Waldegrave, Hon William


Porter, Barry
Walden, George


Portillo, Michael
Walker, Bill (T'side N)


Powell, William (Corby)
Walker, Rt Hon P. (W'cester)


Powley, John
Wall, Sir Patrick


Prentice, Rt Hon Reg
Waller, Gary


Price, Sir David
Walters, Dennis


Prior, Rt Hon James
Wardle, C. (Bexhill)


Pym, Rt Hon Francis
Warren, Kenneth


Raffan, Keith
Watson, John


Raison, Rt Hon Timothy
Watts, John






Wells, Bowen (Hertford)
Wood, Timothy


Wells, Sir John (Maidstone)
Woodcock, Michael


Wheeler, John
Yeo, Tim


Whitfield, John
Young, Sir George (Acton)


Whitney, Raymond
Younger, Rt Hon George


Wiggin, Jerry



Wilkinson, John
Tellers for the Ayes:


Winterton, Mrs Ann
Mr. Carol Mather and


Winterton, Nicholas
Mr. Robert Boscawen.


Wolfson, Mark





NOES


Abse, Leo
Dubs, Alfred


Adams, Allen (Paisley N)
Duffy, A. E. P.


Alton, David
Dunwoody, Hon Mrs G.


Anderson, Donald
Eadie, Alex


Archer, Rt Hon Peter
Eastham, Ken


Ashley, Rt Hon Jack
Edwards, Bob (W'h'mpt'n SE)


Ashton, Joe
Evans, John (St. Helens N)


Atkinson, N. (Tottenham)
Ewing, Harry


Bagier, Gordon A. T.
Fatchett, Derek


Banks, Tony (Newham NW)
Faulds, Andrew


Barnett, Guy
Field, Frank (Birkenhead)


Barron, Kevin
Fields, T. (L'pool Broad Gn)


Beckett, Mrs Margaret
Fisher, Mark


Beith, A. J.
Flannery, Martin


Bell, Stuart
Foot, Rt Hon Michael


Benn, Rt Hon Tony
Foster, Derek


Bennett, A. (Dent'n &amp; Red'sh)
Foulkes, George


Bermingham, Gerald
Fraser, J. (Norwood)


Bidwell, Sydney
Freeson, Rt Hon Reginald


Blair, Anthony
Freud, Clement


Boothroyd, Miss Betty
Garrett, W. E.


Boyes, Roland
Godman, Dr Norman


Bray, Dr Jeremy
Golding, John


Brown, Gordon (D'f'mline E)
Gould, Bryan


Brown, N. (N'c'tle-u-Tyne E)
Gourlay, Harry


Brown, Ron (E'burgh, Leith)
Hamilton, James (M'well N)


Bruce, Malcolm
Hamilton, W. W. (Fife Central)


Buchan, Norman
Hancock, Michael


Caborn, Richard
Hardy, Peter


Callaghan, Rt Hon J.
Harman, Ms Harriet


Callaghan, Jim (Heyw'd &amp; M)
Harrison, Rt Hon Walter


Campbell-Savours, Dale
Hart, Rt Hon Dame Judith


Canavan, Dennis
Hattersley, Rt Hon Roy


Carlile, Alexander (Montg'y)
Haynes, Frank


Carter-Jones, Lewis
Healey, Rt Hon Denis


Clark, Dr David (S Shields)
Heffer, Eric S.


Clarke, Thomas
Hogg, N. (C'nauld &amp; Kilsyth)


Clay, Robert
Holland, Stuart (Vauxhall)


Clelland, David Gordon
Home Robertson, John


Clwyd, Mrs Ann
Howells, Geraint


Cocks, Rt Hon M. (Bristol S)
Hoyle, Douglas


Cohen, Harry
Hughes, Dr Mark (Durham)


Conlan, Bernard
Hughes, Robert (Aberdeen N)


Cook, Robin F. (Livingston)
Hughes, Roy (Newport East)


Corbett, Robin
Hughes, Sean (Knowsley S)


Corbyn, Jeremy
Hughes, Simon (Southwark)


Craigen, J. M.
Janner, Hon Greville


Crowther, Stan
Jenkins, Rt Hon Roy (Hillh'd)


Cunliffe, Lawrence
John, Brynmor


Cunningham, Dr John
Johnston, Sir Russell


Davies, Rt Hon Denzil (L'lli)
Jones, Barry (Alyn &amp; Deeside)


Davies, Ronald (Caerphilly)
Kaufman, Rt Hon Gerald


Davis, Terry (B'ham, H'ge H'l)
Kennedy, Charles


Deakins, Eric
Kilroy-Silk, Robert


Dewar, Donald
Kinnock, Rt Hon Neil


Dixon, Donald
Kirkwood, Archy


Dormand, Jack
Lambie, David


Douglas, Dick
Lamond, James





Leadbitter, Ted
Roberts, Allan (Bootle)


Leighton, Ronald
Robertson, George


Litherland, Robert
Robinson, G. (Coventry NW)


Livsey, Richard
Rogers, Allan


Lloyd, Tony (Stretford)
Rooker, J. W.


Lofthouse, Geoffrey
Ross, Ernest (Dundee W)


McDonald, Dr Oonagh
Rowlands, Ted


McGuire, Michael
Ryman, John


McKelvey, William
Sedgemore, Brian


MacKenzie, Rt Hon Gregor
Sheerman, Barry


Maclennan, Robert
Sheldon, Rt Hon R.


McNamara, Kevin
Shore, Rt Hon Peter


McTaggart, Robert
Short, Ms Clare (Ladywood)


Madden, Max
Short, Mrs R.(W'hampt'n NE)


Marek, Dr John
Silkin, Rt Hon J.


Marshall, David (Shettleston)
Skinner, Dennis


Martin, Michael
Smith, C.(Isl'ton S &amp; F'bury)


Mason, Rt Hon Roy
Smith, Rt Hon J. (M'ds E)


Maxton, John
Snape, Peter


Maynard, Miss Joan
Soley, Clive


Meacher, Michael
Spearing, Nigel


Meadowcroft, Michael
Steel, Rt Hon David


Michie, William
Stewart, Rt Hon D. (W Isles)


Mikardo, Ian
Stott, Roger


Millan, Rt Hon Bruce
Strang, Gavin


Miller, Dr M. S. (E Kilbride)
Straw, Jack


Mitchell, Austin (G't Grimsby)
Thomas, Dafydd (Merioneth)


Morris, Rt Hon A. (W'shawe)
Thomas, Dr R. (Carmarthen)


Morris, Rt Hon J. (Aberavon)
Thompson, J. (Wansbeck)


Nellist, David
Thorne, Stan (Preston)


Oakes, Rt Hon Gordon
Tinn, James


O'Brien, William
Torney, Tom


O'Neill, Martin
Wallace, James


Orme, Rt Hon Stanley
Wardell, Gareth (Gower)


Owen, Rt Hon Dr David
Weetch, Ken


Park, George
Welsh, Michael


Parry, Robert
White, James


Patchett, Terry
Wigley, Dafydd


Pavitt, Laurie
Williams, Rt Hon A.


Pendry, Tom
Wilson, Gordon


Penhaligon, David
Winnick, David


Pike, Peter
Wrigglesworth, Ian


Powell, Raymond (Ogmore)
Young, David (Bolton SE)


Prescott, John



Radice, Giles
Tellers for the Noes:


Redmond, Martin
Mr. Allen McKay and


Rees, Rt Hon M. (Leeds S)
Mr. John McWilliam.


Richardson, Ms Jo

Question accordingly agreed to.

4. VEHICLES EXCISE DUTY (HACKNEY CARRIAGES AND FARMERS' GOODS VEHICLES)

Resolved,
That the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 shall have effect, in relation to licences taken out after 18th March 1986, with the amendments set out below:

But this Resolution shall not authorise the making of amendments which would result in different provisions being in force in different parts of Great Britain;
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
(1) For Part II of Schedule 2 to each of the Acts of 1971 and 1972 (annual rates of duty for hackney carriages) there shall be substituted the following—

PART II


Description of vehicle
Rate of duty



£


Hackney carriages … … … … … … … … …
52·50



with an additional £1·05 for each person above 20 (excluding the driver) for which the vehicle has seating capacity.

(2) In Schedule 4 to each of the Acts of 1971 and 1972 (annual rates of duty on goods vehicles)—

(a) in Part I, in sub-paragraph (2) of paragraph 6 (farmer's goods vehicle or showman's goods vehicle having a plated gross weight or a plated train weight) in paragraph (b) (weight exceeding 7·5 tonnes but not

TABLE A(1)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT RATES FOR FARMERS' GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


12
13
210
170
170


13
14
280
175
175


14
15
350
175
175


15
17
475
180
175


17
19
—
240
175


19
21
—
320
180


21
23
—
420
245


23
25
—
720
330


25
27
—
—
465


27
29
—
—
665


29
30.49
—
—
1,090

exceeding 12 tonnes) for "£135" (which applies to farmers' goods vehicles only) there shall be substituted "£155"; and

(b) in Part II, for Tables A(1), C(1) and D(1) (rates for farmers' goods vehicles having plated weight exceeding 12 tonnes) there shall be substituted the Tables set out below:

TABLE C(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi- trailers with not less than two axles
For a tractor unit to be used only with semi- trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
235
215
215


14
16
290
220
220


16
18
330
220
220


18
20
385
220
220


20
22
435
270
220


22
23
465
300
220


23
25
530
365
225


25
26
530
405
265


26
28
530
500
345


28
29
555
555
390


29
31
765
765
495


31
33
1,115
1,115
780


33
34
1,230
1,230
1,150


34
36
1,405
1,405
1,405


36
38
1,580
1,580
1,580

TABLE D(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING THREE OR MORE AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi- trailers with not less than two axles
For a tractor unit to be used only with semi- trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
215
215
215


14
20
220
220
220


20
22
270
220
220


22
23
300
220
220


23
25
365
220
220


25
26
405
225
220


26
28
500
230
225


28
29
555
270
230


29
31
765
325
240


31
33
1,115
495
250


33
34
1,140
725
315


34
36
1,205
1,035
475


36
38
1,390
1,390
710

5. VEHICLES EXCISE DUTY (TRADE LICENCES)

Resolved,
That provision be made with respect to the rates of duty applicable to trade licences under section 16 of each of the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972.

6. ABOLITION OF CERTAIN EXCISE LICENCE DUTIES

Resolved,
That no excise licence duty shall be chargeable on the grant after 18th March 1986 of an excise licence under any provision of the Alcoholic Liquor Duties Act 1979 or under section 2 of the Matches and Mechanical Lighters Duties Act 1979:
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

7. GENERAL BETTING DUTY, POOL BETTING DUTY AND BINGO DUTY

Resolved,
That provision may be made extending to Northern Ireland the provisions of the Betting and Gaming Duties Act 1981 relating to general betting duty, pool betting duty and bingo duty.

8. CUSTOMS AND EXCISE DUTIES (WAREHOUSING)

Resolved,
That provision may be made with respect to the matters which may be dealt with in regulations under section 93 of the Customs and Excise Management Act 1979 (warehousing regulations).

9. VALUE ADDED TAX (REGISTRATION)

Resolved,
That for the purposes of the Value Added Tax Act 1983 provision may be made with respect to the registration of two or more persons as one taxable person.

10. VALUE ADDED TAX (ZERO-RATING)

Resolved,
That provision may be made for the imposition of conditions with respect to the zero-rating of supplies of goods by virtue of section 16(6) of the Value Added Tax Act 1983.

11. VALUE ADDED TAX (RELIEF ON IMPORTATION)

Resolved,
That provision may be made with respect to conditional relief from value added tax under section 19 of the Value Added Tax Act 1983.

12. VALUE ADDED TAX (PROVISION OF ACCOMMODATION)

Resolved,
That provision may be made with respect to the valuation for the purposes of value added tax of certain supplies of services consisting in the provision of accommodation.

13. INCOME TAX (CHARGE AND RATES FOR 1986–87)

Question put,

That—
(1) Income tax for the year 1986–87 shall be charged at the basic rate of 29 per cent. and, in respect of so much of an individual's total income as exceeds £17,200 (the basic rate limit as determined under subsection (4) of section 24 of the Finance Act 1980—indexation), at such higher rates as are specified in the Table below:

TABLE


Higher rate bands
Higher rate


The first £3,000 … … … … …
40 per cent.


The next £5,200 … … … … …
45 per cent.


The next 7,900 … … … … …
50 per cent.


The next £7,900 … … … … …
55 per cent.


The remainder … … … … …
60 per cent.

(2) Section 24(4) of the Finance Act 1980 (indexation of thresholds) shall not, so far as it relates to the higher rate bands, apply for the year 1986–87:

(3) This Resolution shall not require any change to be made in the amounts deductable or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 18th May 1986:

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

The House divided: Ayes 343, Noes 43.

Division No.113]
[10.30 pm


AYES


Adley, Robert
Chapman, Sydney


Aitken, Jonathan
Chope, Christopher


Alexander, Richard
Clark, Hon A. (Plym'th S'n)


Alison, Rt Hon Michael
Clark, Dr Michael (Rochford)


Amess, David
Clark, Sir W. (Croydon S)


Ancram, Michael
Clarke, Rt Hon K. (Rushcliffe)


Arnold, Tom
Cockeram, Eric


Ashby, David
Colvin, Michael


Aspinwall, Jack
Conway, Derek


Atkins, Rt Hon Sir H.
Coombs, Simon


Atkins, Robert (South Ribble)
Cope, John


Atkinson, David (B'm'th E)
Cormack, Patrick


Baker, Rt Hon K. (Mole Vall'y)
Corrie, John


Baker, Nicholas (Dorset N)
Couchman, James


Baldry, Tony
Cranborne, Viscount


Banks, Robert (Harrogate)
Crouch, David


Batiste, Spencer
Currie, Mrs Edwina


Beaumont-Dark, Anthony
Dickens, Geoffrey


Bellingham, Henry
Dorrell, Stephen


Bendall, Vivian
Dover, Den


Bennett, Rt Hon Sir Frederic
du Cann, Rt Hon Sir Edward


Benyon, William
Dunn, Robert


Best, Keith
Durant, Tony


Bevan, David Gilroy
Dykes, Hugh


Biffen, Rt Hon John
Edwards, Rt Hon N. (P'broke)


Biggs-Davison, Sir John
Eggar, Tim


Blackburn, John
Emery, Sir Peter


Blaker, Rt Hon Sir Peter
Evennett, David


Body, Sir Richard
Fallon, Michael


Bonsor, Sir Nicholas
Farr, Sir John


Bottomley, Peter
Favell, Anthony


Bottomley, Mrs Virginia
Fenner, Mrs Peggy


Bowden, A. (Brighton K'to'n)
Finsberg, Sir Geoffrey


Bowden, Gerald (Dulwich)
Fletcher, Alexander


Boyson, Dr Rhodes
Fookes, Miss Janet


Braine, Rt Hon Sir Bernard
Forman, Nigel


Brandon-Bravo, Martin
Forsyth, Michael (Stirling)


Bright, Graham
Forth, Eric


Brinton, Tim
Fowler, Rt Hon Norman


Brittan, Rt Hon Leon
Fox, Marcus


Brooke, Hon Peter
Franks, Cecil


Brown, M. (Brigg &amp; Cl'thpes)
Fraser, Peter (Angus East)


Browne, John
Freeman, Roger


Bruinvels, Peter
Fry, Peter


Buchanan-Smith, Rt Hon A.
Gale, Roger


Buck, Sir Antony
Galley, Roy


Budgen, Nick
Gardiner, George (Reigate)


Burt, Alistair
Gardner, Sir Edward (Fylde)


Butcher, John
Glyn, Dr Alan


Butler, Rt Hon Sir Adam
Goodhart, Sir Philip


Butterfill, John
Goodlad, Alastair


Carlisle, John (Luton N)
Gorst, John


Carlisle, Kenneth (Lincoln)
Gow, Ian


Carlisle, Rt Hon M. (W'ton S)
Gower, Sir Raymond


Carttiss, Michael
Grant, Sir Anthony


Cash, William
Greenway, Harry


Chalker, Mrs Lynda
Gregory, Conal


Channon, Rt Hon Paul
Griffiths, Sir Eldon






Griffiths, Peter (Portsm'th N)
Malins, Humfrey


Grist, Ian
Malone, Gerald


Ground, Patrick
Maples, John


Grylls, Michael
Marland, Paul


Hamilton, Hon A. (Epsom)
Marlow, Antony


Hampson, Dr Keith
Marshall, Michael (Arundel)


Hanley, Jeremy
Mates, Michael


Hannam, John
Maude, Hon Francis


Hargreaves, Kenneth
Mawhinney, Dr Brian


Harris, David
Maxwell-Hyslop, Robin


Hawkins, C. (High Peak)
Mayhew, Sir Patrick


Hawksley, Warren
Miller, Hal (B'grove)


Hayhoe, Rt Hon Barney
Mills, Iain (Meriden)


Hayward, Robert
Miscampbell, Norman


Heath, Rt Hon Edward
Mitchell, David (Hants NW)


Heathcoat-Amory, David
Moate, Roger


Heddle, John
Monro, Sir Hector


Henderson, Barry
Montgomery, Sir Fergus


Heseltine, Rt Hon Michael
Moore, Rt Hon John


Hickmet, Richard
Morris, M. (N'hampton S)


Higgins, Rt Hon Terence L.
Morrison, Hon P. (Chester)


Hill, James
Moynihan, Hon C.


Hind, Kenneth
Mudd, David


Hirst, Michael
Neale, Gerrard


Hogg, Hon Douglas (Gr'th'm)
Nelson, Anthony


Holland, Sir Philip (Gedling)
Neubert, Michael


Holt, Richard
Newton, Tony


Hordern, Sir Peter
Nicholls, Patrick


Howard, Michael
Normanton, Tom


Howarth, Alan (Stratf'd-on-A)
Norris, Steven


Howarth, Gerald (Cannock)
Onslow, Cranley


Howell, Rt Hon D. (G'ldford)
Oppenheim, Phillip


Howell, Ralph (Norfolk, N)
Oppenheim, Rt Hon Mrs S.


Hubbard-Miles, Peter
Osborn, Sir John


Hume, John
Ottaway, Richard


Hunt, David (Wirral W)
Page, Richard (Herts SW)


Hunter, Andrew
Parkinson, Rt Hon Cecil


Hurd, Rt Hon Douglas
Parris, Matthew


Jackson, Robert
Patten, Christopher (Bath)


Jenkin, Rt Hon Patrick
Patten, J. (Oxf W &amp; Abgdn)


Jessel, Toby
Pattie, Geoffrey


Johnson Smith, Sir Geoffrey
Pawsey, James


Jones, Gwilym (Cardiff N)
Peacock, Mrs Elizabeth


Jones, Robert (Herts W)
Percival, Rt Hon Sir Ian


Joseph, Rt Hon Sir Keith
Porter, Barry


Kellett-Bowman, Mrs Elaine
Portillo, Michael


Kershaw, Sir Anthony
Powell, William (Corby)


Key, Robert
Powley, John


King, Roger (B'ham N'field)
Prentice, Rt Hon Reg


Knight, Greg (Derby N)
Price, Sir David


Knowles, Michael
Prior, Rt Hon James


Knox, David
Raffan, Keith


Lamont, Norman
Raison, Rt Hon Timothy


Lang, Ian
Rathbone, Tim


Latham, Michael
Rees, Rt Hon Peter (Dover)


Lawler, Geoffrey
Renton, Tim


Lawrence, Ivan
Rhodes James, Robert


Lawson, Rt Hon Nigel
Rhys Williams, Sir Brandon


Lee, John (Pendle)
Ridley, Rt Hon Nicholas


Lennox-Boyd, Hon Mark
Ridsdale, Sir Julian


Lewis, Sir Kenneth (Stamf'd)
Rifkind, Rt Hon Malcolm


Lightbown, David
Rippon, Rt Hon Geoffrey


Lilley, Peter
Roberts, Wyn (Conwy)


Lloyd, Ian (Havant)
Robinson, Mark (N'port W)


Lloyd, Peter (Fareham)
Roe, Mrs Marion


Lord, Michael
Rossi, Sir Hugh


Luce, Rt Hon Richard
Rost, Peter


Lyell, Nicholas
Rowe, Andrew


McCrindle, Robert
Rumbold, Mrs Angela


McCurley, Mrs Anna
Ryder, Richard


Macfarlane, Neil
Sackville, Hon Thomas


MacGregor, Rt Hon John
Sainsbury, Hon Timothy


MacKay, Andrew (Berkshire)
St. John-Stevas, Rt Hon N.


MacKay, John (Argyll &amp; Bute)
Sayeed, Jonathan


Maclean, David John
Shaw, Giles (Pudsey)


McNair-Wilson, M. (N'bury)
Shaw, Sir Michael (Scarb')


McNair-Wilson, P. (New F'st)
Shepherd, Colin (Hereford)


McQuarrie, Albert
Shepherd, Richard (Aldridge)


Madel, David
Shersby, Michael


Major, John
Silvester, Fred





Sims, Roger
van Straubenzee, Sir W.


Skeet, Sir Trevor
Vaughan, Sir Gerard


Smith, Sir Dudley (Warwick)
Viggers, Peter


Soames, Hon Nicholas
Waddington, David


Speller, Tony
Wakeham, Rt Hon John


Spencer, Derek
Waldegrave, Hon William


Spicer, Jim (Dorset W)
Walden, George


Spicer, Michael (S Worcs)
Walker, Bill (T'side N)


Squire, Robin
Walker, Rt Hon P. (W'cester)


Stanbrook, Ivor
Wall, Sir Patrick


Stanley, Rt Hon John
Waller, Gary


Steen, Anthony
Walters, Dennis


Stern, Michael
Wardle, C. (Bexhill)


Stevens, Lewis (Nuneaton)
Warren, Kenneth


Stewart, Allan (Eastwood)
Watson, John


Stewart, Andrew (Sherwood)
Watts, John


Stewart, Ian (Hertf'dshire N)
Wells, Bowen (Hertford)


Stokes, John
Wells, Sir John (Maidstone)


Stradling Thomas, Sir John
Wheeler, John


Sumberg, David
Whitfield, John


Tapsell, Sir Peter
Whitney, Raymond


Taylor, John (Solihull)
Wiggin, Jerry


Tebbit, Rt Hon Norman
Wilkinson, John


Temple-Morris, Peter
Winterton, Mrs Ann


Thatcher, Rt Hon Mrs M.
Winterton, Nicholas


Thomas, Rt Hon Peter
Wolfson, Mark


Thompson, Donald (Calder V)
Wood, Timothy


Thompson, Patrick (N'ich N)
Woodcock, Michael


Thornton, Malcolm
Yeo, Tim


Thurnham, Peter
Young, Sir George (Acton)


Townend, John (Bridlington)
Younger, Rt Hon George


Townsend, Cyril D. (B'heath)



Tracey, Richard
Tellers for the Ayes:


Trippier, David
Mr. Carol Mather and


Trotter, Neville
Mr. Robert Boscawen.


Twinn, Dr Ian





NOES


Alton, David
Madden, Max


Ashdown, Paddy
Meadowcroft, Michael


Ashton, Joe
Mikardo, Ian


Beith, A. J.
Nellist, David


Bruce, Malcolm
Owen, Rt Hon Dr David


Canavan, Dennis
Parry, Robert


Carlile, Alexander (Montg'y)
Penhaligon, David


Clay, Robert
Pike, Peter


Cohen, Harry
Skinner, Dennis


Field, Frank (Birkenhead)
Steel, Rt Hon David


Fields, T. (L'pool Broad Gn)
Stewart, Rt Hon D. (W Isles)


Freud, Clement
Thomas, Dafydd (Merioneth)


Godman, Dr Norman
Thomas, Dr R. (Carmarthen)


Hancock, Michael
Thorne, Stan (Preston)


Harrison, Rt Hon Walter
Wainwright, R.


Heffer, Eric S.
Wardell, Gareth (Gower)


Howells, Geraint
Wigley, Dafydd


Hughes, Simon (Southwark)
Wilson, Gordon


Jenkins, Rt Hon Roy (Hillh'd)
Wrigglesworth, Ian


Johnston, Sir Russell



Kennedy, Charles
Tellers for the Noes:


Kirkwood, Archy
Mr. James Wallace and


Lambie, David
Mr. Robert Maclean.


Livsey, Richard

Question accordingly agreed to.

14. INCOME TAX (INDEXED PERSONAL RELIEFS ETC.): OPERATIVE DATE FOR PAYE

Resolved,
That, for the year 1986–87, in subsection (7) of section 24 of the Finance Act 1980 (which specifies the date from which indexed changes in income tax thresholds and allowances are to be brought into account for the purposes of PAYE) for "5th May" there shall be substituted "18th May":
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

15. RELIEF FOR INTEREST (LIMIT FOR 1986–87)

Resolved,
That, for the year 1986–87, the qualifying maximum referred to in paragraphs 5(1) and 24(3) of Schedule 1 to the Finance Act 1974 (limit on relief for interest on certain loans for the purchase or improvement of land) shall be £30,000:
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

16. ADVANCE CORPORATION TAX (RATE FOR FINANCIAL YEAR 1986)

Resolved,
That the rate of advance corporation tax for the financial year 1986 shall be twenty-nine seventy-firsts.

17. BUILDING SOCIETIES

Resolved,
That provision may be made with respect to the treatment for the purposes of income tax and corporation tax of dividends and interest payable in respect of shares in or deposits with or loans to a building society.

18. SHARES AND RIGHTS TO ACQUIRE SHARES OBTAINED BY DIRECTORS AND EMPLOYEES

Resolved,
That charges to income tax may be imposed by provisions amending section 186 of the Income and Corporation Taxes Act 1970 (directors and employees granted rights to acquire shares) and section 79 of the Finance Act 1972 (share incentive schemes).

19. OCCUPATIONAL PENSION SCHEMES

Resolved,
That provision may be made with respect to—

(a) payments to employers out of funds held for the purposes of occupational pension schemes; and
(b) exemptions and reliefs from tax under section 21 of the Finance Act 1970.

20. ENTERPRISE ALLOWANCE

Resolved,
That provision (including retrospective provision) may be made about enterprise allowance.

21. BUSINESS EXPANSION SCHEME

Resolved,
That provision may be made amending Schedule 5 to the Finance Act 1983.

22. COMPANY RECONSTRUCTIONS

Resolved,
That provision may be made with respect to relief from tax where a company ceases to carry on a trade or part of a trade.

23. LOANS TO PARTICIPATORS

Resolved,
That provision may be made with respect to tax chargeable under section 286 of the Income and Corporation Taxes Act 1970.

24. CHARITIES

Resolved,
That provision may be made with respect to—

(a) exemption under section 360 of the Income and Corporation Taxes Act 1970 (exemptions for charities from tax under Schedule A to F);
(b) charges to tax where assets are disposed of by charities; and
(c) covenanted payments to charities and payments by one charity to another.

25. VALUE ADDED TAX PENALTIES ETC. (INCOME TAX AND CORPORATION TAX)

Resolved,
That charges to income tax and corporation tax may be imposed by provisions with respect to penalties, interest and surcharge under Chapter II of Part I of the Finance Act 1985 (value added tax).

26. ASSOCIATED COMPANIES (OIL AND GAS INDUSTRY)

Resolved,
That provision may be made extending the cases in which two companies are associated with one another for the purposes of Part II of the Oil Taxation Act 1975.

27. CAPITAL ALLOWANCES (MACHINERY AND PLANT ETC.)

Resolved,
That provision may be made with respect to allowances in respect of expenditure on the provision of machinery or plant for leasing and on the provision of certain vehicles.

28. CAPITAL ALLOWANCES (MINERAL EXPLORATION AND EXTRACTION)

Resolved,
That provision may be made with respect to allowances under Chapter III of Part I of the Capital Allowances Act 1968 (mines, oil wells etc.)

29. DUAL RESIDENT TRUSTS: CAPITAL GAINS TAX

Resolved,
That provision may be made for denying or recovering relief under section 79 of the Finance Act 1980 (general relief for gifts) where the transferee is a body of trustees which is or becomes treated as resident both in the United Kingdom and elsewhere.

30. SECURITIES (INCOME TAX, CAPITAL GAINS TAX AND CORPORATION TAX)

Resolved,
That charges to income tax, capital gains tax and corporation tax may be imposed by provisions about events occurring after 18th March 1986 in relation to securities.

31. STAMP DUTY (RECONSTRUCTIONS ETC.)

Resolved,
That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973–
(1) In section 55 of the Finance Act 1927 and in section 4 of the Finance Act (Northern Ireland) 1928 (reconstructions and amalgamations) in paragraph (B) of subsection (1) for the words "not be chargeable" there shall be substituted the words "be chargeable at the rate mentioned in subsection (9) of this section" and for the words "nor shall any such duty be chargeable" there shall be substituted the word "or".

(2) In consequence, each of those sections shall be further amended as follows—

(a) at the beginning of paragraph (B) of subsection (1) there shall be inserted the words "If a claim is made under this section";
(b) in paragraph (a) of the proviso to subsection (1) the words from "either it" to "liable or" and from "either that" to "duty or" shall be omitted, and in paragraph (c) of that proviso the words "for exemption" shall be omitted;
(c) in subsection (2) for the words "for exemption under paragraph (B) of subsection (1) of" there shall be substituted the word "under";
(d) in subsection (5) the words "for exemption" shall be omitted;


(e) in subsection (6), in paragraph (a) the words "for expemption from duty" shall be omitted, in paragraph (c) for the word "exemption" there shall be substituted the word "claim", and in the words following paragraph (c) for the word "exemption" there shall be substituted the word "claim", for the word "remitted" (in the first place where it occurs) there shall be substituted the word "unpaid" and the words from "in the case of duty remitted under paragraph (A)" to "the said subsection" shall he omitted;
(f) in subsection (7) for the words "for exemption from duty under subsection (1) of" there shall be substituted the word "under", for the words "such exemption" there shall be substituted the words "such a claim to be allowed" and for the words "have been remitted" there shall be substituted the words "not have been chargeable".

(3) At the end of each of those sections there shall be inserted—
(9) The rate is the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect.

(4) In paragraph 12 of Schedule 18 to the Finance Act 1980 (demergers) for sub-paragraph (1) there shall be substituted—
(1) If a document executed solely for the purpose of effecting an exempt distribution is chargeable with stamp duty under the heading 'Conveyance or Transfer on Sale' in Schedule 1 to the Stamp Act 1891, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the document gives effect.
(1A) If a document executed solely for the purpose of effecting an exempt distribution is chargeable with stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891, it shall not be treated as duly stamped unless it is stamped in accordance with section 12 of the Stamp Act 1891 with a particular stamp denoting that it is duly stamped.

(5) In paragraph 12(3) of Schedule 18 to the Finance Act 1980 for the words "this paragraph" there shall be substituted the words "sub-paragraph (2) above".

(6) In section 78 of the Finance Act 1985 (takeovers) the following shall be substituted for subsection (2)—
(2) If the instrument transferring the shares in company B by way of the exchange is chargeable with stamp duty under the heading 'Conveyance or Transfer on Sale' in Schedule 1 to the Stamp Act 1891, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect.

(7) In section 79 of the Finance Act 1985 (voluntary winding-up: transfer of shares) the following shall be substituted for subsection (2)—
(2) If the instrument transferring the shares in company B to company A is chargeable with stamp duty under the heading 'Conveyance or Transfer on Sale' in Schedule 1 to the Stamp Act 1891, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect.

(8) In section 78 and in section 79 of the Finance Act 1985—

(a) in subsection (3) for the word "ignored" there shall be substituted the words "treated as reduced by 50 per cent.";
(b) subsection (9) shall be omitted;
(c) in subsection (10) for "(3)" there shall be substituted "(2) or (3)".

(9) This Resolution applies to any instrument which is executed after 24th March 1986 unless—

(a) it is executed in pursuance of an unconditional contract made on or before 18th March 1986, or
(b) it transfers stock or marketable securities and is executed in pursuance of a general offer (for the stock or securities) which became unconditional as to acceptances on or before 18th March 1986.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

32. STAMP DUTY (ACQUISITIONS)

Resolved,
That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

(1) This Resolution applies where a company (the acquiring company) acquires the whole or part of an undertaking of another company (the target company) in pursuance of a scheme for the reconstruction of the target company.
(2) If the first and second conditions (as defined below) are fulfilled, stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on an instrument executed for the purposes of or in connection with the transfer of the undertaking or part.
(3) An instrument on which stamp duty is not chargeable by virtue only of paragraph (2) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that paragraph or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.
(4) The first condition is that the registered office of the acquiring company is in the United Kingdom and that the consideration for the acquisition—


(a) consists of or includes the issue of shares in the acquiring company to all the shareholders of the target company;
(b) includes nothing else (if anything) but the assumption or discharge by the acquiring company of liabilities of the target company.

(5) The second condition is that—

(a) the acquisition is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, income tax, corporation tax or capital gains tax,
(b) after the acquisition has been made, each shareholder of each of the companies is a shareholder of the other, and
(c) after the acquisition has been made, the proportion of shares of one of the companies held by any shareholder is the same as the proportion of shares of the other company held by that shareholder.

(6) This Resolution applies to any instrument which is executed after 24th March 1986 unless it is executed in pursuance of an unconditional contract made on or before 18th March 1986.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

33. STAMP DUTY (LOAN CAPITAL)

Resolved,
That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

(1) The following provisions shall cease to have effect—

(a) in section 62 of the Finance Act 1963, subsections (2) and (6) (commonwealth stock);
(b) in section 11 of the Finance Act (Northern Ireland) 1963, subsections (2) and (5) (commonwealth stock);
(c) section 29 of the Finance Act 1967 (local authority capital);
(d) section 6 of the Finance Act (Northern Ireland) 1967 (local authority capital);
(e) section 126 of the Finance Act 1967 (loan capital).

(2) Stamp duty under the heading "Bearer Instrument" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on the issue of an instrument which relates to loan capital or on the transfer of the loan capital constituted by or transferable by means of, such an instrument.

(3) Stamp duty shall not be chargeable on an instrument which transfers loan capital issued or raised by—

(a) the financial support fund of the Organisation for Economic Co-operation and Development,


(b) the Inter-American Development Bank, or
(c) an organisation which was a designated international organisation at the time of the transfer (whether or not it was such an organisation at the time the loan capital was issued or raised).

(4) Stamp duty shall not be chargeable on an instrument which transfers short-term loan capital.

(5) Where stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 is chargeable on an instrument which transfers loan capital, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect.

(6) In this Resolution "loan capital" means—

(a) any debenture stock, corporation stock or funded debt, by whatever name known, issued by a body corporate or other body of persons (which here includes a local authority and any body whether formed or established in the United Kingdom or elsewhere);
(b) any capital raised by such a body if the capital is borrowed or has the character of borrowed money, and whether it is in the form of stock or any other form;
(c) stock or marketable securities issued by the government of any country or territory outside the United Kingdom.

(7) In this Resolution "short-term loan capital" means loan capital the date (or latest date) for the repayment of which is not more than five years after the date on which it is issued or raised.

(8) In this Resolution "designated international organisation" means an international organisation designated for the purposes of section 126 of the Finance Act 1984 by an order made under subsection (1) of that section.

(9) In construing sections 80(3) and 81(3) of the Finance Act 1985 (definitions by reference to section 126 of the Finance Act 1976) the effect of this Resolution shall be ignored.

(10) This Resolution applies to any instrument which falls within section 60(1) of the Finance Act 1963 and is issued after 24th March 1986.

(11) This Resolution applies to any instrument which falls within section 60(2) of that Act if the loan capital constituted by or transferable by means of it is transferred after 24th March 1986.

(12) This Resolution applies, in the case of instruments not falling within section 60(1) or (2) of that Act, to any instrument which is executed after 24th March 1986, unless it is executed in pursuance of a contract made on or before 18th March 1986.

(13) In this Resolution references to section 60(1) of the Finance Act 1963 include references to section 9(1)(a) of the Finance Act (Northern Ireland) 1963 and references to section 60(2) of the former Act include references to section 9(1)(b) of the latter.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

34. STAMP DUTY (BEARER LETTERS OF ALLOTMENT ETC.)

Resolved,
That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

(1) In Schedule 1 to the Stamp Act 1891, in the heading "Bearer Instrument", paragraph 2 of the exemptions (bearer letter of allotment etc. required to be surrendered not later than six months after issue) shall be omitted.
(2) This Resolution applies to any instrument which falls within section 60(1) of the Finance Act 1963 and is issued after 24th March 1986, unless it is issued by a company in pursuance of a general offer for its shares and the offer became unconditional as to acceptances on or before 18th March 1986.
(3) This Resolution applies to any instrument which falls within section 60(2) of that Act if the stock constituted by or transferable by means of it is transferred after 24th March 1986.
(4) In this Resolution the reference to section 60(1) of the Finance Act 1963 includes a reference to section 9(1)(a) of the Finance Act (Northern Ireland) 1963 and the reference to section 60(2) of the former Act includes a reference to section 9(1)(b) of the latter.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

35. STAMP DUTY (LETTERS OF ALLOTMENT)

Resolved,
That provision may be made for restricting the exemption from stamp duty provided by section 65(1) of the Finance Act 1963 and section 14(1) of the Finance Act (Northern Ireland) 1963.

36. STAMP DUTY (COMPANY'S PURCHASE OF OWN SHARES)

Resolved,
That provision may be made for charging stamp duty on returns delivered under section 169 of the Companies Act 1985 or Article 53 of the Companies (Northern Ireland) Order 1982.

37. STAMP DUTY RESERVE TAX

Resolved,
That a tax shall be charged in respect of events occurring after 18th march 1986 in relation to securities.

38. TAX UNDER CAPITAL TRANSFER TAX ACT 1984

Question put,
That charges to tax under the Capital Transfer Tax Act 1984 may be imposed—

(a) by provisions relating to deaths occurring on or after 18th March 1986;
(b) by provisions removing relief referable to mutual transfers where at least one of the transfers occurs on or after that date; and
(c) by provisions relating to relief under Chapter I (business property) or Chapter II (agricultural property) of Part V of that Act in the case of transfers of value on or after that date.

The House divided: Ayes 340, Noes 203.

Division No. 114]
[10.43 pm


AYES


Adley, Robert
Brandon-Bravo, Martin


Aitken, Jonathan
Bright, Graham


Alexander, Richard
Brinton, Tim


Alison, Rt Hon Michael
Brittan, Rt Hon Leon


Amess, David
Brooke, Hon Peter


Ancram, Michael
Brown, M. (Brigg &amp; Cl'thpes)


Arnold, Tom
Browne, John


Ashby, David
Bruinvels, Peter


Aspinwall, Jack
Buchanan-Smith, Rt Hon A.


Atkins, Rt Hon Sir H.
Buck, Sir Antony


Atkins, Robert (South Ribble)
Budgen, Nick


Atkinson, David (B'm'th E)
Burt, Alistair


Baker, Rt Hon K. (Mole Vall'y)
Butler, Rt Hon Sir Adam


Baker, Nicholas (Dorset N)
Butterfill, John


Baldry, Tony
Carlisle, John (Luton N)


Banks, Robert (Harrogate)
Carlisle, Kenneth (Lincoln)


Batiste, Spencer
Carlisle, Rt Hon M. (W'ton S)


Beaumont-Dark, Anthony
Carttiss, Michael


Bellingham, Henry
Cash, William


Bendall, Vivian
Chalker, Mrs Lynda


Bennett, Rt Hon Sir Frederic
Channon, Rt Hon Paul


Benyon, William
Chapman, Sydney


Best, Keith
Chope, Christopher


Bevan, David Gilroy
Clark, Hon A. (Plym'th S'n)


Biffen, Rt Hon John
Clark, Dr Michael (Rochford)


Biggs-Davison, Sir John
Clark, Sir W. (Croydon S)


Blackburn, John
Clarke, Rt Hon K. (Rushcliffe)


Blaker, Rt Hon Sir Peter
Cockeram, Eric


Body, Sir Richard
Colvin, Michael


Bonsor, Sir Nicholas
Conway, Derek


Bottomley, Peter
Coombs, Simon


Bottomley, Mrs Virginia
Cope, John


Bowden, A. (Brighton K'to'n)
Cormack, Patrick


Bowden, Gerald (Dulwich)
Corrie, John


Boyson, Dr Rhodes
Couchman, James


Braine, Rt Hon Sir Bernard
Cranborne, Viscount






Critchley, Julian
Hunter, Andrew


Crouch, David
Jackson, Robert


Currie, Mrs Edwina
Jenkin, Rt Hon Patrick


Dickens, Geoffrey
Jessel, Toby


Dorrell, Stephen
Johnson Smith, Sir Geoffrey


Dover, Den
Jones, Gwilym (Cardiff N)


du Cann, Rt Hon Sir Edward
Jones, Robert (Herts W)


Dunn, Robert
Joseph, Rt Hon Sir Keith


Durant, Tony
Kellett-Bowman, Mrs Elaine


Dykes, Hugh
Kershaw, Sir Anthony


Edwards, Rt Hon N. (P'broke)
Key, Robert


Eggar, Tim
King, Roger (B'ham N'field)


Emery, Sir Peter
Knight, Greg (Derby N)


Evennett, David
Knowles, Michael


Fallon, Michael
Knox, David


Farr, Sir John
Lamont, Norman


Favell, Anthony
Lang, Ian


Fenner, Mrs Peggy
Latham, Michael


Finsberg, Sir Geoffrey
Lawler, Geoffrey


Fletcher, Alexander
Lawrence, Ivan


Fookes, Miss Janet
Lawson, Rt Hon Nigel


Forman, Nigel
Lee, John (Pendle)


Forsyth, Michael (Stirling)
Lennox-Boyd, Hon Mark


Forth, Eric
Lester, Jim


Fowler, Rt Hon Norman
Lewis, Sir Kenneth (Stamf'd)


Fox, Marcus
Lightbown, David


Franks, Cecil
Lilley, Peter


Fraser, Peter (Angus East)
Lloyd, Ian (Havant)


Freeman, Roger
Lloyd, Peter (Fareham)


Fry, Peter
Lord, Michael


Gale, Roger
Luce, Rt Hon Richard


Galley, Roy
Lyell, Nicholas


Gardiner, George (Reigate)
McCrindle, Robert


Gardner, Sir Edward (Fylde)
McCurley, Mrs Anna


Gilmour, Rt Hon Sir Ian
Macfarlane, Neil


Glyn, Dr Alan
MacGregor, Rt Hon John


Goodhart, Sir Philip
MacKay, Andrew (Berkshire)


Gorst, John
MacKay, John (Argyll &amp; Bute)


Gow, Ian
Maclean, David John


Gower, Sir Raymond
McNair-Wilson, M. (N'bury)


Grant, Sir Anthony
McNair-Wilson, P. (New F'st)


Greenway, Harry
McQuarrie, Albert


Gregory, Conal
Madel, David


Griffiths, Sir Eldon
Major, John


Griffiths, Peter (Portsm'th N)
Malins, Humfrey


Grist, Ian
Malone, Gerald


Ground, Patrick
Maples, John


Grylls, Michael
Marland, Paul


Hamilton, Hon A. (Epsom)
Marlow, Antony


Hampson, Dr Keith
Maude, Hon Francis


Hanley, Jeremy
Mawhinney, Dr Brian


Hannam, John
Maxwell-Hyslop, Robin


Hargreaves, Kenneth
Mayhew, Sir Patrick


Harris, David
Meyer, Sir Anthony


Harvey, Robert
Miller, Hal (B'grove)


Hawkins, C. (High Peak)
Mills, Iain (Meriden)


Hawksley, Warren
Miscampbell, Norman


Hayhoe, Rt Hon Barney
Mitchell, David (Hants NW)


Hayward, Robert
Moate, Roger


Heath, Rt Hon Edward
Monro, Sir Hector


Heathcoat-Amory, David
Montgomery, Sir Fergus


Heddle, John
Moore, Rt Hon John


Henderson, Barry
Morris, M. (N'hampton S)


Heseltine, Rt Hon Michael
Morrison, Hon C. (Devizes)


Hickmet, Richard
Morrison, Hon P. (Chester)


Higgins, Rt Hon Terence L.
Moynihan, Hon C.


Hill, James
Mudd, David


Hirst, Michael
Neale, Gerrard


Hogg, Hon Douglas (Gr'th'm)
Nelson, Anthony


Holland, Sir Philip (Gedling)
Neubert, Michael


Holt, Richard
Newton, Tony


Hordern, Sir Peter
Nicholls, Patrick


Howard, Michael
Normanton, Tom


Howarth, Alan (Stratf'd-on-A)
Norris, Steven


Howarth, Gerald (Cannock)
Onslow, Cranley


Howell, Rt Hon D. (G'ldford)
Oppenheim, Phillip


Howell, Ralph (Norfolk, N)
Oppenheim, Rt Hon Mrs S.


Hubbard-Miles, Peter
Osborn, Sir John


Hunt, David (Wirral W)
Ottaway, Richard


Hunt, John (Ravensbourne)
Page, Richard (Herts SW)





Parkinson, Rt Hon Cecil
Stern, Michael


Parris, Matthew
Stevens, Lewis (Nuneaton)


Patten, Christopher (Bath)
Stewart, Allan (Eastwood)


Patten, J. (Oxf W &amp; Abgdn)
Stewart, Andrew (Sherwood)


Pattie, Geoffrey
Stewart, Ian (Hertf'dshire N)


Pawsey, James
Stokes, John


Peacock, Mrs Elizabeth
Stradling Thomas, Sir John


Percival, Rt Hon Sir Ian
Sumberg, David


Porter, Barry
Tapsell, Sir Peter


Portillo, Michael
Taylor, John (Solihull)


Powell, William (Corby)
Tebbit, Rt Hon Norman


Powley, John
Temple-Morris, Peter


Prentice, Rt Hon Reg
Thatcher, Rt Hon Mrs M.


Price, Sir David
Thomas, Rt Hon Peter


Prior, Rt Hon James
Thompson, Donald (Calder V)


Pym, Rt Hon Francis
Thompson, Patrick (N'ich N)


Raffan, Keith
Thornton, Malcolm


Raison, Rt Hon Timothy
Thurnham, Peter


Rathbone, Tim
Townend, John (Bridlington)


Rees, Rt Hon Peter (Dover)
Townsend, Cyril D. (B'heath)


Renton, Tim
Trippier, David


Rhodes James, Robert
Twinn, Dr Ian


Ridley, Rt Hon Nicholas
van Straubenzee, Sir W.


Ridsdale, Sir Julian
Vaughan, Sir Gerard


Rifkind, Rt Hon Malcolm
Viggers, Peter


Rippon, Rt Hon Geoffrey
Waddington, David


Roberts, Wyn (Conwy)
Wakeham, Rt Hon John


Robinson, Mark (N'port W)
Waldegrave, Hon William


Roe, Mrs Marion
Walden, George


Rossi, Sir Hugh
Walker, Bill (T'side N)


Rost, Peter
Walker, Rt Hon P. (W'cester)


Rowe, Andrew
Wall, Sir Patrick


Rumbold, Mrs Angela
Waller, Gary


Ryder, Richard
Walters, Dennis


Sackville, Hon Thomas
Wardle, C. (Bexhill)


Sainsbury, Hon Timothy
Warren, Kenneth


St. John-Stevas, Rt Hon N.
Watts, John


Sayeed, Jonathan
Wells, Bowen (Hertford)


Shaw, Giles (Pudsey)
Wells, Sir John (Maidstone)


Shaw, Sir Michael (Scarb')
Wheeler, John


Shepherd, Colin (Hereford)
Whitfield, John


Shepherd, Richard (Aldridge)
Whitney, Raymond


Shersby, Michael
Wiggin, Jerry


Silvester, Fred
Wilkinson, John


Sims, Roger
Winterton, Mrs Ann


Skeet, Sir Trevor
Winterton, Nicholas


Smith, Sir Dudley (Warwick)
Wolfson, Mark


Smith, Tim (Beaconsfield)
Wood, Timothy


Soames, Hon Nicholas
Woodcock, Michael


Spencer, Derek
Yeo, Tim


Spicer, Jim (Dorset W)
Young, Sir George (Acton)


Spicer, Michael (S Worcs)
Younger, Rt Hon George


Squire, Robin



Stanbrook, Ivor
Tellers for the Ayes:


Stanley, Rt Hon John
Mr. Carol Mather and


Steen, Anthony
Mr. Robert Boscawen.




NOES


Abse, Leo
Bray, Dr Jeremy


Adams, Allen (Paisley N)
Brown, Gordon (D'f'mline E)


Alton, David
Brown, N. (N'c'tle-u-Tyne E)


Anderson, Donald
Brown, Ron (E'burgh, Leith)


Archer, Rt Hon Peter
Bruce, Malcolm


Ashdown, Paddy
Buchan, Norman


Ashley, Rt Hon Jack
Caborn, Richard


Ashton, Joe
Callaghan, Rt Hon J.


Atkinson, N. (Tottenham)
Callaghan, Jim (Heyw'd &amp; M)


Bagier, Gordon A. T.
Campbell-Savours, Dale


Banks, Tony (Newham NW)
Canavan, Dennis


Barnett, Guy
Carter-Jones, Lewis


Barron, Kevin
Clark, Dr David (S Shields)


Beckett, Mrs Margaret
Clarke, Thomas


Beith, A. J.
Clay, Robert


Bell, Stuart
Clelland, David Gordon


Bennett, A. (Dent'n &amp; Red'sh)
Clwyd, Mrs Ann


Bermingham, Gerald
Cocks, Rt Hon M. (Bristol S)


Bidwell, Sydney
Cohen, Harry


Blair, Anthony
Conlan, Bernard


Boothroyd, Miss Betty
Cook, Robin F. (Livingston)


Boyes, Roland
Corbett, Robin






Corbyn, Jeremy
McKelvey, William


Craigen, J. M.
MacKenzie, Rt Ron Gregor


Crowther, Stan
Maclennan, Robert


Cunliffe, Lawrence
McNamara, Kevin


Cunningham, Dr John
McTaggart, Robert


Davies, Rt Hon Denzil (L'lli)
McWilliam, John


Davies, Ronald (Caerphilly)
Madden, Max


Davis, Terry (B'ham, H'ge H'l)
Marek, Dr John


Deakins, Eric
Marshall, David (Shettleston)


Dewar, Donald
Martin, Michael


Dixon, Donald
Mason, Rt Hon Roy


Dormand, Jack
Maxton, John


Douglas, Dick
Maynard, Miss Joan


Dubs, Alfred
Meacher, Michael


Duffy, A. E. P.
Meadowcroft, Michael


Dunwoody, Hon Mrs G.
Michie, William


Eadie, Alex
Mikardo, Ian


Eastham, Ken
Millan, Rt Hon Bruce


Evans, John (St. Helens N)
Miller, Dr M. S. (E Kilbride)


Ewing, Harry
Mitchell, Austin (G't Grimsby)


Fatchett, Derek
Morris, Rt Hon A. (W'shawe)


Faulds, Andrew
Morris, Rt Hon J. (Aberavon)


Field, Frank (Birkenhead)
Nellist, David


Fields, T. (L'pool Broad Gn)
Oakes, Rt Hon Gordon


Fisher, Mark
O'Brien, William


Flannery, Martin
O'Neill, Martin


Foot, Rt Hon Michael
Orme, Rt Hon Stanley


Foster, Derek
Park, George


Foulkes, George
Parry, Robert


Fraser, J. (Norwood)
Patchett, Terry


Freeson, Rt Hon Reginald
Pavitt, Laurie


Freud, Clement
Pendry, Tom


Garrett, W. E.
Penhaligon, David


Godman, Dr Norman
Pike, Peter


Golding, John
Powell, Raymond (Ogmore)


Gould, Bryan
Prescott, John


Hamilton, James (M'well N)
Radice, Giles


Hamilton, W. W. (Fife Central)
Redmond, Martin


Hancock, Michael
Rees, Rt Hon M. (Leeds S)


Hardy, Peter
Richardson, Ms Jo


Harman, Ms Harriet
Roberts, Allan (Bootle)


Harrison, Rt Hon Walter
Robertson, George


Hart, Rt Hon Dame Judith
Robinson, G. (Coventry NW)


Hattersley, Rt Hon Roy
Rogers, Allan


Heffer, Eric S.
Rooker, J. W.


Hogg, N. (C'nauld &amp; Kilsyth)
Ross, Ernest (Dundee W)


Holland, Stuart (Vauxhall)
Rowlands, Ted


Home Robertson, John
Ryman, John


Hoyle, Douglas
Sedgemore, Brian


Hughes, Dr Mark (Durham)
Sheerman, Barry


Hughes, Robert (Aberdeen N)
Sheldon, Rt Hon R.


Hughes, Roy (Newport East)
Shore, Rt Hon Peter


Hughes, Sean (Knowsley S)
Short, Ms Clare (Ladywood)


Hughes, Simon (Southwark)
Short, Mrs R.(W'hampt'n NE)


Janner, Hon Greville
Silkin, Rt Hon J.


Jenkins, Rt Hon Roy (Hillh'd)
Skinner, Dennis


John, Brynmor
Smith, Rt Hon J. (M'ds E)


Johnston, Sir Russell
Snape, Peter


Jones, Barry (Alyn &amp; Deeside)
Soley, Clive


Kaufman, Rt Hon Gerald
Spearing, Nigel


Kennedy, Charles
Steel, Rt Hon David


Kilroy-Silk, Robert
Stewart, Rt Hon D. (W Isles)


Kinnock, Rt Hon Neil
Stott, Roger


Kirkwood, Archy
Strang, Gavin


Lambie, David
Straw, Jack


Lamond, James
Thomas, Dafydd (Merioneth)


Leadbitter, Ted
Thomas, Dr R. (Carmarthen)


Leighton, Ronald
Thompson, J. (Wansbeck)


Litherland, Robert
Thorne, Stan (Preston)


Lloyd, Tony (Stretford)
Tinn, James


Lofthouse, Geoffrey
Torney, Tom


Loyden, Edward
Wainwright, R.


McDonald, Dr Oonagh
Wallace, James


McGuire, Michael
Wardell, Gareth (Gower)


McKay, Allen (Penistone)
Wareing, Robert





Weetch, Ken
Wrigglesworth, Ian


Welsh, Michael
Young, David (Bolton SE)


White, James



Wigley, Dafydd
Tellers for the Noes:


Williams, Rt Hon A.
Mr. Frank Haynes and


Wilson, Gordon
Mr. Chris Smith.


Winnick, David

Question accordingly agreed to.

39. OIL TAXATION: LIGHT GASES

Resolved,
That, for the purpose of petroleum revenue tax, provision may be made with respect to the valuation of light gases.

40. OIL TAXATION: ATTRIBUTION OF CHARGEABLE RECEIPTS AND ALLOWABLE EXPENDITURE

Resolved,
That, in any case where—

(a) tariff receipts or disposal receipts arising in a chargeable period ending after 30th June 1982, or
(b) allowable expenditure, within the meaning of Part II of Schedule I to the Oil Taxation Act 1983,

fall to be (or have at any time since the passing of the said Act of 1983 fallen to be) attributed to one of two or more oil fields and development decisions relating to those fields were first made on the same day, provision may be made for determining which of those decisions is to be presumed to have been made first.

41. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)

Resolved
That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from tax.

PROCEDURE (FUTURE TAXATION)

Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision taking effect in a future year with respect to—

(a) the treatment for the purposes of value added tax of fuel which is or is to be provided or appropriated by a taxable person for private use in a motor vehicle;
(b) relief from investment in corporate trades; and
(c) relief in respect of payments to charities.

Bill ordered to be brought in upon the foregoing resolutions by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Walker, Mr. Secretary Fowler, Mr. Secretary Ridley, Mr. Secretary Baker, Mr. Kenneth Clarke, Mr. John MacGregor, Mr. Secretary Channon Mr. John Moore, Mr. Ian Stewart and Mr. Peter Brooke.

FINANCE

Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance, presented accordingly by Mr. John Moore and read the First time; to be read a Second time tomorrow and to be printed. [Bill 117.]

BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the consideration of the Lords Amendment to the Museum of London Bill may be proceeded with, though opposed, until any hour.—[Mr. Lennox-Boyd.]

Museum of London Bill

Lords amendment considered.

New Clause

REPORTS

Lords amendment: After clause 4, insert:
 . Not later than 31st March 1989 and subsequently at intervals not exceeding three years the Secretary of State shall lay before each House of Parliament a report on the exercise of the functions of the Board of Governors of the Museum of London since the commencement of this Act or, in the case of the second and subsequent reports, since the end of the period to which the previous report related.

The Minister for the Arts (Mr. Richard Luce): I beg to move, That this House doth agree with the Lords in the said amendment.
The moving of the new clause by the Government in another place fulfilled a commitment that I gave to the House on Report on 3 February. The object of the amendment is to ensure, by a statutory obligation, that regular reports on the Museum of London's activities are produced and laid before Parliament. The hon. Member for Paisley, South (Mr. Buchan) will recall that I made it clear on 3 February that, were we to impose that statutory obligation on the museum itself, there would be an element of hybridity in the proceedings. For that reason, we moved a new clause in another place.
The Museum of London already produces regular reports and I have no doubt that it would continue to do so without a statutory obligation being placed upon it. However, persuasive arguments were put forward in the earlier stages that, because of the important accountability principle, there was a good case for enshrining the reporting commitment into a statutory obligation. The Government agree and so proposed the amendment.
I stress another matter about the wording. The new clause provides for reports to be produced not less frequently than every three years. I emphasise that there is no intention to change the practice of producing annual reports. The museum will continue to do that. As I explained in Committee, it would be an overtight imposition to require the museum by law to produce reports every year. The words follow the precedent for statutory reporting obligations on other major museums under the National Heritage Act 1983.

Mr. Norman Buchan: On behalf of the Opposition I welcome one of the few changes that we have managed to secure. The new clause is helpful and I am grateful to the Minister for his clarification on the three years or one year reporting obligation.
I welcome the clause, but the Opposition do not welcome the Bill. We shall reverse its provisions when we return to power. In the meantime it will be convenient to have a report on the workings of the museum. I support the new clause.

Mr. Jeremy Hanley: I am grateful to my right hon. Friend for the new clause. The Opposition moved an amendment that there should be an annual report. I suggested that a three-year period would be wiser because of the charitable nature of the organisation and because of the practice among museums in general. Not only should one remember that the Museum of London already produces a report annually,


but I am certain that if something is to be received from organisations outside local government, such as industry and, under the new Budget, from individuals who might find it more attractive to give money to such causes, reports are important because they can help to raise even more money through imformative presentation.

Mr. Clement Freud: My right hon. and hon. Friends welcome the proposal. In view of the Budget and the change in the personae of those who might contribute to the museum, I urge the Minister

not to stray too far from an annual report. In a changing scene it is immensely helpful to accountability for a report not only to be there, but to be seen to be there.

Sir Antony Buck: I dashed into the House in the hope of hearing the Minister, but I was just too late. The position as I understand it now seems satisfactory. There is to be an obligation to produce a report every three years, but that does not preclude an annual report, which has been of considerable value to those interested in the museum, and in museums generally. I join in the general accord for the proposal.

Question put and agreed to.

Coal Industry

The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): I beg to move,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1986, which was laid before this House on 10 March, be approved.
I understand that it might be in order to take both orders together.

Mr. Deputy Speaker (Sir Paul Dean): With the agreement of the House, we shall take both orders together.

Mr. Roy Mason: On a point of order, Mr. Deputy Speaker. If we are taking both orders together, are we restricted to only 90 minutes' debate?

Mr. Deputy Speaker: That is so. The House has decided to take the two orders together which means a debate of 1½ hours on both orders, not three hours.

Mr. Hunt: When on 28 March 1985 I commended to the House the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Amendment Order 1985 I warned that, although the long and damaging strike which the industry had suffered was over, its consequences would be with us for some considerable time. One important consequence was that many miners failed to pay sufficient national insurance contributions during the tax year 1984–85 to qualify for full contributions-based social security benefits on claims falling within the 1986 benefit year. The purpose of the present Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order is both to provide for the continued operation of the schemes and to amend the existing terms to take account of this consequence.
The provisions of the scheme now being introduced were announced in outline by my right hon. Friend the Secretary of State for Energy on 19 December 1985. They follow closely for full-time employees those of the present schemes which expire on 29 March, providing for essentially the same range of lump sum and weekly benefits; but they provide important additional protection for those older men whose redundancy date falls within the 1986 social security benefit year and who, for the reasons I have already mentioned, fail to qualify for full state unemployment benefit or sickness benefit.
As right hon. and hon. Members who take an interest in the operation of the redundancy scheme will know, to be entitled to weekly benefits under the present rules a man must, with certain limited exceptions, either satisfy the conditions for receipt of unemployment benefit, sickness benefit or invalidity pension or, with regard to unemployment benefit, satisfy those conditions but for entitlement to that benefit being exhausted. This rule, which has been part of the scheme since it was first introduced, was designed to ensure a proper integration of continuing weekly payments under the scheme with social security benefits.
In the present circumstances, however, it has an unfortunate consequence since it means that an older man whose redundancy falls within the 1986 social security benefit year and who lacks sufficient national insurance contributions to qualify for unemployment benefit or sickness benefit stands to lose the benefits for which he

failed to make adequate contributions and his weekly benefits under the redundant mineworkers payments scheme.
The present order seeks to overcome this difficulty in articles 9 and 10. Article 10 provides that where such a man is unemployed or unavailable for work through sickness, provided he has an entitlement to credits on national insurance contributions he is not precluded from weekly benefits under the scheme even if he fails to satisfy the contribution conditions for entitlement to unemployment benefit or sickness benefit. That is, provided he meets essentially the same general requirement as before, other than the contribution requirement, he may receive weekly payments under the redundant mineworkers payments scheme. Article 9 then allows the Secretary of State to pay such a man additional scheme benefits as well, together with any unemployment benefit, sickness benefit, invalidity pension or severe disablement allowance to which he is entitled, equal the total amount of those benefits to which he would have been entitled but for the failure to satisfy the contribution conditions. In short, he may receive make-up payments under the redundant mineworkers payment scheme to make good his loss of social security benefits.
Clearly it would be inequitable if men who had failed to pay full national insurance contributions in 1984–85 and received these make-up payments were in consequence better off overall than those who did pay and would therefore satisfy the existing rules. For this reason, the order also provides, in article 18, for a reduction in the lump sum payable to men who receive topped-up weekly payments. It is not practicable for the amount of that reduction to equal for each man the precise figure which he might have paid in national insurance contributions had he continued working. That figure is anyway ultimately a matter of conjecture. The article provides, therefore, for a uniform deduction from lump sum entitlement of £600 where the man has no entitlement to unemployment benefit, or £550 if he has some entitlement but at less than the full rate. These figures represent a reasonable reduction taking account of the average national insurance contributions paid by those falling into the two categories and those typically paid by men who worked throughout the period of the strike.
There is one further provision in the draft order which I should mention. This concerns the treatment of former part-time workers who were employed for fewer than 30 hours per week. The benefits available under the redundant mineworkers payments scheme have been improved substantially under the present Government, notably in 1983, 1984 and under the present order. It is a generous scheme primarily designed fully to recompense those full-time employees who help the industry through its present period of necessary restructuring by taking voluntary redundancy. However, I suggest there can be no justification for providing those who take redundancy with higher weekly earnings than when they worked, nor for paying lump sums on the scale now provided under the scheme to former part-time employees who may have been employed for as little as 16 hours per week. The new order provides, therefore, that to be entitled to full scheme benefits a former employee must have been employed for 30 or more hours per week in the relevant tax year.
Before discussing the second of the two draft orders before us tonight, I think it would be right for me to say something about the future of the coal industry and the


RMPS. In the past 12 months, the industry has made giant strides towards economic viability. Productivity has increased by one quarter and much uneconomic capacity has gone. This has been achieved without a single compulsory redundancy. All those who wished to remain in the industry have been able to do so. In the nature of things, an extractive industry can offer no guarantee that there will never be redundancies; and the future size and prosperity of the coal industry must depend on the success of men and management in making it competitive. There is no doubt that the recent fall in the price of oil increases the severity of the competition which the coal industry faces, and will make it necessary for the industry to strengthen still further the efforts it is making to eliminate losses.
Nevertheless, the Government's view is that the time is approaching when the NCB can, like the great majority of employers, take more responsibility for deciding and financing the redundancy terms which it offers. The new order will operate to the end of the National Coal Board's 1986–87 financial year, when the power to make schemes under the Coal Industry Act 1977 expires. It is right for me now to make it clear that it is not the Government's intention to introduce new legislation extending the power to make schemes beyond that date.
To enable payments to be made under the new schemes, it is necessary also to provide financial headroom. Section 4(3) of the Coal Industry Act 1983 increased the limit on aggregate cumulative expenditure on Redundant Mineworkers and Concessionary Coal Payments Schemes under the 1977 Act to £1,200 million. Section 3(3) of the Coal Industry Act 1985 gave the Secretary of State power to increase that limit by order made with the approval of the Treasury up to £1,800 million. The Coal Industry (Limit on Payments in Respect of Redundant Mineworkers) Order 1986 increases the limit to that figure.
When the 1985 Coal Industry Bill was presented to Parliament, it was impossible to know how many men would leave the industry under the redundant mineworkers and concessionary coal payments schemes then operating, nor what, if any, scheme would follow expiry of that scheme in March 1986. We were therefore faced with the choice of increasing the existing limit on expenditure to a figure so large that it could accommodate any conceivable circumstance, or providing for the power to increase the existing figure by order as and when circumstances required. As hon. and right hon. Members know, we adopted the latter course. The present order exercises the power then provided and provides the financial headroom to enable payments to be made under the new redundancy order. I should emphasise that the increase of £600 million in the limit of expenditure is not based upon an estimate of numbers who might leave in the coming year; it is simply the maximum envisaged in the 1985 Act and therefore compatible with the widest possible range of outcomes.
To conclude, Mr. Deputy Speaker, the Government have demonstrated by their financial support to the NCB over the past few years that they are committed to the creation of an efficient, competitive and viable coal industry; an industry capable of contributing to the national economy rather than one which must continually come cap in hand for further support; an industry with a proud future to match its proud past, capable of providing

long-term, secure jobs with good earnings for those who work in it. The Government have further demonstrated by the redundancy terms they have made available and by their support for the National Coal Board's enterprise subsidiary, their equal commitment to ensuring that those who leave the industry as part of the present restructuring and their communities are as far as possible compensated and protected.
There are signs that the industry is now coming right. Productivity, which for so many years grew at a rate which was the despair of all those who cared and could only spell long-term disaster, improves month by month. Costs of production are falling.
The industry is not yet at a point at which we can say that all the difficulties are over, but the portents are good. The industry is leaner and fitter than it has been for many years. We can all see that with further efforts, and just a little good fortune, the industry may enter a new and prosperous era. The Government are committed to that goal and to providing the support necessary to make it possible. As part of that process I hope that right hon. and hon. Members on both sides of the House will welcome the orders.

Mr. Alexander Eadie: We are asked to approve an increase from £1,200 million to £1,800 million because the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1984 expires at the end of the month. The revised orders extend the scheme until 28 March 1987 with some principal changes, which allow us to consider what has prompted them and to look at the coal industry today.
A new definition has been added to cover "coal industry employment". There have also been some technical alterations to the definitions of "days of employment", "industrial accident" and "industrial disease". I hope that the Minister will comment further on those when he replies. A definition has also been included to cover "severe disablement allowance". The definition of "subsidiary" has been amended to bring it up to date from the Companies Act 1948 to the Companies Act 1985.
The Minister tried to explain that under the present scheme part-time workers are not discriminated against. However, the new order introduces a pro rata reduction in benefits, and that is contained in article 5(1)(a) by reference to 30 hours and the pro rata extension of the weekly benefit table down from £35 to £10. There is also a consequential amendment to article 7 relating to the adjustment of basic benefit whereby a reference to employment on average for not less than 30 hours a week is introduced. Those amendments are clearly designed to reduce benefits in future to part-time employees in the industry.
As a result of the 1984–85 strike, a number of members, as the Minister indicated, have insufficient national insurance contributions to qualify for unemployment benefit in the benefit year commencing January 1986. That, in turn, means that men aged 50 and over who would normally have qualified for weekly benefit would be barred by virtue of failing to establish a right to unemployment benefit. To overcome that problem, the new order makes provision for an additional weekly benefit by switching the second order of unemployment benefit equivalent to be applied to the first year of scheme entitlement for unemployment benefit which will be


payable in the second year. For example, under the new arrangements a person who is made redundant from the beginning of the tax year 1986–87, by registering as unemployed, will be given a credit towards the national insurance which will bring him hack into entitlement to unemployment benefit in 1987 for 52 weeks. The Minister referred to the statement made by the Secretary of State on 19 December.
The Minister may want to correct me, but my information is that there will be a reduction in redundancy pay as a consequence of that arrangement. I hope that the Minister will confirm that when he replies.
The only other principal change is the revision of the weekly benefits tables in appendix 4 to select the increases in the level of unemployment benefit introduced with effect from November 1985. Apart from that, we are dealing only with the tables changing in relation to lump sum payments.
Tonight we are asked to approve the due process of law and legal enactment by discussing these orders affecting the coal industry. It is a strange irony that although such processes apply to Parliament, which we would defend, they do not apply to the working and administration of the National Coal Board. I will discuss three aspects of the board's conduct which could be related to the legality of the orders which we are being asked to approve this evening.
First, I shall deal with the new modified colliery review procedure. The old procedure gave the NCB the power to act as judge, jury and executioner. The new procedure, upon which many high hopes were pinned, has been dashed by the NCB's attitude, for example, to the Bates colliery closure and its decision to ignore the recommendations of the independent arbiter that the colliery should remain open.
The NCB has clearly interpreted the new procedure as allowing it to be the judge, jury and executioner on colliery closures. The NCB has done enormous damage by its action and destroyed any faith that people working in the industry may have had in the new procedure. There will be a further test tomorrow when the Kingsley Drift colliery in Yorkshire is considered under this new procedure.
The NCB continues to flout any form of judicial process and natural justice, and this is highlighted by its attitude to miners who were victims of the strike which ended over a year ago.
Industrial tribunals have given verdicts of unfair dismissals and recommended that miners should be reinstated. Union leaders have attempted to regain normality in those areas in the spirit of consultation and conciliation. However, in all but a few instances these attempts and recommendations have met a stony-faced reaction by the NCB.
The NCB has been given a legal opinion by no less an authority than the Attorney-General that it is in breach of the law if it tampers with the miners' pension fund and uses striking miners, in a dispute over a year old, as an excuse to delay the wage increases of members of the National Union of Mineworkers, unless that increase is tied to amending the miners' pension fund. Despite the legal advice that the NCB would be in breach of the law, it intends to spend money, which is not its own, on what could be an expensive legal action.
We need changes in the NCB, and a start should be made by the Government. They should ask the present chairman of the NCB, Mr. Ian MacGregor, to go now

rather than in September. The industry and the country have had to put up with this expensive liability for too long.
The backcloth to the orders signals a further contraction of manpower in the mining industry. There will be more pit closures and more redundancies. The figures released for the past year show that 30,000 jobs have been lost. That is depressing. If the Minister is not concerned, the House certainly is concerned about the continued contraction of manpower in the industry.
The House is aware of the problems of energy provision as a consequence of the massive drop in oil price, referred to by the Minister. We were reminded of that when we debated the EEC document on state aids to the coal industry. It has not gone unobserved by some of us that, like baying wolves, the leaders of the Central Electricity Generating Board are going for the British coal industry in this energy price war which is confronting many nations in the world. The CEGB wants to import more foreign coal. It does not care whether it is Polish or South African coal, as long as the price is right. I hope that the Minister will tell us that the Central Electricity Generating Board has been told that it is not in the business of creating unemployment in the British coal industry by its quest for more imports of foreign coal.
I endorse what the Minister said about the performance of the industry and the way that the miners are responding to the needs and to the call of the nation to produce more coal. We do not oppose these orders, but the Minister must reply to some of the issues that I have raised, because they are of great importance not only to people working in the industry but to my right hon. and hon. Friends.

Mr. Phillip Oppenheim: I recently had the honour to be invited to a meeting in my constituency organised by the local National Farmers Union. I was slightly surprised when one old farmer told me that farmers did far better under Labour Governments and coal miners did better under Conservative Governments. That is probably just as well, because I have only about 100 farmers but more than 2,000 coal miners and a large number of retired miners in my constituency. On pondering this, I have to admit that there is some truth in the words of the old farmer. I do not want to go into the problems of agriculture, but history seems to bear out his view that coal miners have done substantially better under Conservative Governments.
It was under the Macmillan Government that coal pools were first arranged to provide fuel for miners over the age of 60. The Heath Government centralised those pools and backdated the concessionary coal allowances to miners aged over 55 on retirement and also backdated it to 1969. In 1983, this Government further reduced to 50 the age for concessionary coal and took over funding for the scheme from the coal pools. In doing that, the Government left out large numbers of miners who were under 60 when they were made redundant because of the massive pit closures of the Wilson Government in the 1960s. During that period, nearly half as many miners were made redundant in my constituency alone as were proposed by the National Coal Board in 1983 and 1984 for the whole country. Some 10,000 miners in my area were made redundant during the 1960s compared with only 20,000 proposed redundancies for the whole country in 1983 and 1984. Those proposed redundancies led to the Scargill strike.
Many of the miners who were made compulsorily redundant under the Wilson Government in the 1960s have had a raw deal. Some worked in the pits from the age of 14 for as many as 30 years in conditions that were far worse than conditions pertaining in the pits today. In the mid-1960s many of them received letters from the chairman of the NCB telling them that the coal industry was set to expand and that their jobs were totally secure. Nonetheless, they were made redundant or at best offered jobs many miles away. When they were made compulsorily redundant under the Wilson Government they were given a pittance in redundancy money, far less in real terms than miners receive today. Furthermore, if they were under the age of 60 when they were made redundant, as many of them were, they received no concessionary coal, even though many of them had contributed to coal pools for miners aged over 60 in the reasonable expectation that they themselves would benefit from those pools. These are the forgotten miners. Their votes were taken for granted by their representatives for too long, and as a result, they got a raw deal.
It is true that most of the advances in the coal industry have come about during the periods of Conservative Governments—better redundancy terms, higher wages and far better concessionary coal allowances. Therefore, there is a precedent for the Government to make further improvements, and to allow retired miners the retrospective benefit, as happened in 1973. I accept that cost has to be a key factor, and I understand that recent estimates by the NCB put the cost of retrospectively extending concessionary coal to miners made redundant in the 1960s at some £3 million. This sounds a very large sum, but it represents only 10 per cent. of the total cost of the concessionary coal scheme that the Government already fund. Furthermore, it represents only 0·15 per cent. of the total cost of the coal industry to the taxpayer.
Concern and support for this is shown by the large number of Members who recently signed an early-day motion on this subject. Therefore, I strongly urge my hon. Friend the Minister to consider extending retrospectively the concessionary coal allowances to those miners made redundant at the age of 60 in the 1960s. If he will not consider that, will he at least consider some one-off payment, or some benefit to these miners, who have had a raw deal?

Dr. Dennis Skinner: The hon. Member for Amber Valley (Mr. Oppenheim) has referred to a matter that some of my hon. Friends will recall has been mentioned almost every time that these redundancies and concessionary coal orders have been debated. I find it rather strange that this Johnny-come-lately can join with those of us like my hon. Friend the Member for Makerfield (Mr. McGuire) in calling for concessionary coal for those who did not get a square deal under the Tory Government.

Mr. Phillip Oppenheim: Will the hon. Gentleman give way?

Mr. Skinner: No, we have not got time. If the hon. Gentleman had been present at some of the coal debates over the past two or three years since he became a Member of Parliament, he would know all about the concern that has consistently been shown by my hon. Friends on this

matter, because they represent almost every coalfield in Britain. That is why they signed my early-day motion on the matter.
I have news for the hon. Gentleman, which the Minister will confirm. When I wrote to the Secretary of State for Energy at the back end of last year about this matter for the umpteenth time—the Minister knows that I have raised it with him several times—the Secretary of State replied to the effect that, notwithstanding the new-found concern on the Tory Benches, he would not consider giving the concessionary coal to the pre-1968 people who did not get a square deal under any Government.

Mr. Oppenheim: rose—

Mr. Skinner: No, I shall not give way. We do not have time, as many of my Friends want to speak on this and many other subjects.
If the hon. Gentleman only knew, he would appreciate that this matter has been raised consistently because some of the miners have done more than 40 years in the pits, and not many of them are left now, because many died. There are widows who should get the coal. It is true that it will cost only about £3 million, and that is why we argue that it should be implemented without any further delay. If the Government can find £2 billion for the farmers in 1984–85, which works out at a massive sum for every farmer in Britain, they could find the money for retired miners' and miner's widows, so that they can have the coal.
I remind the hon. Member for Amber Valley that some of the pits that shut in and around his constituency were not closed under a Labour Government—I happened to be a north Derbyshire miner. Almost without exception, the pits there were closed by the Macmillan Government, about which he spoke.
I want concessionary coal for the people in Blackwell. South Normanton, Pinxton, Tibshelf and all of the other villages in which the pits shut under the pre- 1968 agreement. We are dealing with, perhaps, the first Secretary of State who has no influence with the chairman of the National Coal Board. We do not expect the Secretary of State to run the day-to-day administration of the NCB, but the present one is just a lame duck. He cannot get anywhere with the chairman. When the miners group met him recently, he was unable to challenge MacGregor on any of these issues. The Minister has to reply to these questions. Why does he and the Secretary of State not use their muscle? Why do they not use what influence they have with the chairman in his last few months? Why do they not send him packing?
It is remarkable that in Kent we have 47 miners, I believe, who have not been given their jobs back. A considerable proportion of them are branch officials. It is almost as if the NCB wanted to pick new officials for the Kent industry. If Ministers have any influence, they should use it to get some reinstatements in Kent, Yorkshire and Scotland. The BBC's "Open Space" programme tonight told of a branch secretary who went to a tribunal, which found that he should get his job back but, because MacGregor is in the driving seat and says that someone must pay for insubordination, he has still not been given his job back, like many others in Scotland.
In Derbyshire recently a man was supposedly given his job back. He and his mate were then sent along for a medical and he did not pass the hearing test. That is another form of victimisation.
The Secretary of State and the Minister have hardly any influence. That was shown graphically in the case of Bates colliery. The colliery review procedure was sabotaged by the NCB, and the Minister sits there, unable to use any influence despite the fact that, over and over again, the Prime Minister, when she was not dealing in shares in a mining company in Australia, said from the Dispatch Box that that procedure was sacrosanct. My hon. Friend the Member for Wentworth (Mr. Hardy) who represents NACODS, knows all about sacrosanct procedures and the promises that were made from the Dispatch Box.
The Minister has a chance. My hon. Friend the Member for Midlothian (Mr. Eadie) mentioned Kinsley drift. It has not been open long.

Mr. Peter Hardy: Six years.

Mr. Skinner: My hon. Friend says six years. Millions of pounds have been invested in the pit. There is a colliery review tomorrow. There is a picket at Hobart house, starting at 9.30 am. I had better get the advert in. If what happened to Bates happens to Kinsley drift, will the Minister use his influence to ensure that the pit gets a fair crack of the whip? I doubt it. During the strike and since, the Secretary of State and the Minister have not been able to do anything with respect to the chairman of the NCB. The Minister now has a chance to put things right, to show that he has some muscle and to give some hope to those who have been victimised. Some 500 miners are still without a job. It has been agreed in courts and tribunals that many of them have not done anything wrong. Perhaps 200 of them could be given their jobs back in the next few weeks. We would, perhaps, understand that, for the first time, the Minister and his right hon. Friend are beginning to use what power they have. Previous Secretaries of State have used that power and influence. We have seen nothing of it during the course of this Government's reign.
The price of oil has fallen again today. If market forces are left to operate, it could result in a massive further rundown in the mining industry. There could be closures on the same scale as in the 1950s and 1960s when Governments—whatever their political hue—decided that oil was cheap, that it could be obtained from the middle east and elsewhere for ever and that they would supplant the miners by using it. The massive drop in the oil price could mean that a Government who were hellbent on allowing market forces to operate would allow cheap oil once again to supplant the 300 years' supply of coal which lies beneath the ground of Britain. That would be foolish, because no one can predict that there will not be a quadrupling of oil prices, as happened in 1972 and 1973.
I hope that the Under-Secretary will not listen to the siren voices of the Central Electricity Generating Board, which suggests in code language that it would not be a bad idea to move over to oil because it is cheap. Such a move would mean that more people will be thrown out of work. More miners would have to receive redundancy payments. More miners would be thrown on to the scrap heap and would have to go on the dole, resulting in a loss of tax revenue to the Government, and so on. I want the Under-Secretary of State to declare that the Government will not let market forces operate freely, that they will use coal and will ensure that the mining industry remains intact.

Mr. David Ashby: The hon. Member for Bolsover (Mr. Skinner) was warbling a somewhat false note—a note that he and all hon. Members know to be false. One should note what the hon. Member for Bolsover said during those years when the Wilson Government were closing so many pits, giving no coal concessions and making no allowances. One would have thought that the hon. Gentleman would sing a song crying out for help for the miners, but there was silence from him. He began to sing that song only when the Conservative party came to office, and, even then, he was not singing it too loudly. Last year, there was an hour and a half debate on this subject; this year, it is a three hour debate. Apart from when the hon. Gentleman tried to interrupt other hon. Members, we heard nothing from him on this subject.

Mr. Andy Stewart: Was he here?

Mr. Ashby: Yes, he was here, but we heard little on this subject until my hon. Friend the Member for Amber Valley (Mr. Oppenheim) and I tabled an early-day motion on concessionary coal for miners. Three or four days later, the hon. Member for Bolsover came rushing in saying, "I had forgotten about that. Let us get on with it." He then tabled his early-day motion. He is always second best. He does not really care about the miners for whom he says he cares so much.
Productivity has increased and the costs of production have fallen in the coal industry. As my hon. Friend the Under-Secretary of State said, we now have a leaner, fitter and more prosperous industry. The coal orders are almost the swan song of the Government's involvement in the industry. It is nice to realise that the coal industry is about to be able to stand on its own two feet? It will be able to produce its own redundancy schemes. It is becoming a good profitable business. No group can be prouder than the miners of being party to this development. They do not want an industry that is supported up to the neck by the taxpayers. They want a sleek, prosperous industry of which they can be proud.
We have a new mine coming on line in south Leicestershire. Asfordby, a new superpit, will be part of the leaner and more profitable industry. I asked for, and indeed have had, undertakings from the chairman that the people of south Leicestershire will be considered first for jobs in the new pit. They have worked throughout and suffered redundancies, and they will look to the Asfordby pit for the future of their industry. I am grateful that they can look to it for future jobs.
My hon. Friend the Member for Amber Valley (Mr. Oppenheim) referred to the early-day motion which I have had the pleasure of signing. When did most of the major redundancies take place, and when were most of the pits closed? We have to look to the years of the Wilson Government, when many pits were closed and redundancy terms were bad. Under the Conservative Government there have been substantial redundancy payments, and coal. allowances have increasingly been given to younger people, and men have been able to leave the pits with dignity, having worked there for many years. It is a far cry from the early years.
There is just one anomaly, and it will not cost much to remedy. I hope that a caring Government and the National Coal Board will take action. I refer to the granting of a


concessionary coal allowance to all those who would have been entitled to it if they were retiring now. It is not much to ask. The amounts and the numbers are not very large. Advertisements have appeared in my constituency asking those who would be entitled to a coal allowance to contact me so that the numbers can be ascertained. I have received many letters from retired miners, all speaking of the hardship that they have suffered and all asking that the concessionary coal allowance be extended to them. I shall quote from just one of them:
I am writing on behalf of my husband … who is now 74 years old. He is one of the miners you refer to in the local papers. He was made redundant in the late 60s under the Wilson government having been made redundant with a miserly £600 and no coal at the age of 59 years. When he came home and told me what was going to happen I felt very sad as he had several working years left and couldn't get another job and was thrown on the scrapheap. The business of not having the coal allowance hit us very hard … for 16 years and had to buy every cobble which does not seem right when a man has worked in the pits for 43 years on the face producing the coal … My husband is a Burton man. He trained the Bevin boys and dedicated his life to the miners. We think what was done with the Wilson Government was indeed a very shabby trick, and we vowed we would never vote Labour again, which we haven't.
That is the view of so many of the miners who were made redundant in the 1960s. They feel that they were let down by the Wilson Government—and indeed they were. We, on the other hand, have not let them down. We have supported and looked after them. We should try to make some restitution for the shabby trick that was played upon the coal miners under the Wilson Government. I am asking the Government to adopt a magnanimous approach and to put right the wrong for which the Opposition know they were responsible.

Mr. A. J. Beith: The hon. Member for Leicestershire, North-West (Mr. Ashby) doth protest too much, not in raising the issue—a cause to which he is welcome among the many hon. Members who have sought to deal with the long-standing problem that affects those people who do not benefit from the concessionary coal scheme—but in his zeal in directing his attack specifically at the activities of the Wilson Government, for which there is a reasonable justification. However, his zeal suggested a diversionary tactic away from some of the problems that have arisen during the period of this Government. He slightly lost his sense of perspective about some of the problems that have arisen during the last two years under the current chairman of the National Coal Board. But let us not complain. Instead let us all join in pressing the Minister to take this step, as the alliance has done over a considerable period.
These orders concern the number of people who retire early or who become redundant by accepting voluntary redundancy as a result of the great changes that are taking place in the coal industry. Those changes are very apparent in the Northumberland coalfield. Many people come into these categories, and many of them come into my constituency to work. They accept employment by transfer to two of the only three remaining collieries in the Northumberland coalfield. Two of those collieries are in my constituency. A considerable question mark hangs over the only remaining colliery that lies outside my constituency. Questions have recently been raised about one of the two collieries in my constituency.
One problem, above all others, has caused anger and great anxiety in the Northumberland coalfield and elsewhere in the coal industry in recent weeks—the attitude of the NCB to the colliery review procedure relating to Bates colliery. For the NCB so markedly to have failed the test of this new procedure by its complete refusal to take any notice of it has removed from the Government any credit that was attached to them for placing emphasis on that procedure during the long months of the dispute. If there is to be any respect at all for the procedure, it has to be respected by the NCB. There may come a time when it will be reasonable for the NCB to take issue in detail with a recommendation of the independent review procedure.
I do not think anybody ever claimed that the colliery review procedure had an absolute right always to override the judgment of the NCB, but for the NCB to take no notice of it whatsoever and to dismiss out of hand the recommendations of the review procedure on Bates colliery has completely destroyed any confidence that could be placed in that procedure and has done considerable damage at a time when attempts were being made on all sides to bring about reconciliation and introduce a new atmosphere into the coalfields. The Government must recognise the seriousness of the NCB's actions in this instance.
Another issue that has caused anxiety in the Northumberland coalfield is the future of Whittle colliery. On several occasions the NCB has stated that that colliery is part of its strategy for the area and that it attaches considerable importance to it. Its coal finds a ready sale. It produces the highest quality household coal. When supply difficulties arise at Whittle I am bombarded with complaints from constituents and coal merchants about their inability to get coal from that colliery and about their dissatisfaction with the substitute that they are offered instead. It produces a great deal of constituency correspondence.
There have been geological difficulties at Whittle, as is well known, which have prevented it recently from achieving the very significant improvements in production targets of recent years. The question has been raised by NACODS in recent weeks as to whether a wholly unrealistic target was being set by the NCB for the preparation of a new face at Whittle to enable it to continue profitably in production. I raised this issue with the area director and I have received further assurances about the future of that pit, but I must emphasise to the Minister that anxieties remain. In a letter which I received yesterday the area director said:
It is precisely because Whittle was part of my Area strategy that I have initiated a special development programme to prepare a replacement coal face. The programme is certainly very demanding, but the organisation and resources are being provided to meet it.
I hope that that means that the work will continue even if whatever initial timetable has been set for it cannot be met.
I do not think that anyone denies the urgency of the work. Certainly nobody who works at the pit wants, in any way, to delay bringing the new face into production. Their future as well as their current earnings depend on it. If Whittle colliery's future were not to be safeguarded the effects on the area of Northumberland around Alnwick and Amble and on many people now coming in from much


further afield in the Ashington and Blyth areas would be disastrous. Whittle is already absorbing men from Bates colliery, as is Ellington.
It is Ellington which remains the prize of the coal industry in the north-east of England and we all depend on its future. The pit has notable achievements to its credit and is now absorbing labour from all parts of the Northumberland coalfield.

Mr. Jack Thompson: The hon. Member for Berwick-upon-Tweed (Mr. Beith) is a neighbour of mine. I think he will recognise that the problems of Whittle colliery and the problem of non-profitability that will arise—I accept the point he has raised—will be covered by the profitability at Ellington and Ashington collieries. That is the way that the National Coal Board ought to organise things. If it is not organising things, each colliery will stand on its own merits. Therefore we may face the problem that Whittle colliery, which employs some people from my constituency, may go under because it has to stand on its own, and not be supported by a neighbouring colliery which is very profitable.

Mr. Beith: It is my belief that in due course Whittle colliery will be able to stand on its own feet and be a profitable colliery. The question is whether it will be carried sufficiently over the period in which the essential work needs to be done. The danger of taking what the hon. Gentleman said to its logical conclusion is that we have had a history in the coal industry of pits being pulled down by the number of other pits they were having to carry. I think that the hon. Gentleman is right to stress that there may be a period, we are going through it now, in which Whittle has to be sustained by the industry to be brought back to profitability, which I am sure can be achieved.
Hanging over all the arguments about profitability is a point mentioned earlier about oil prices. Clearly, that is leading the NCB to pose fresh questions about the profitability of a number of pits. Those of us who are concerned, not just about the coal industry but about the future energy provision of our nation, are bound to record the extraordinary variations wich have occurred in the oil price over the years and the political factors which tend to determine that price. There can be no mistaking the political forces which are at work in the current reductions in the price of oil. We cannot place total reliance on a future of low oil prices.
One of the great advantages this country enjoys is the freedom that its coal supplies give it to have a wide range of energy sources, without firm dependence on any one of them, and not to be impelled to rush into the development of nuclear power at a time when there are so many unanswered questions in that area. Our coalfields give us a considerable advantage and we should not throw that advantage away, least of all on the assumption that the present oil prices will continue to drop and to stay down indefinitely.

Mr. Andy Stewart: I was not intending to say anything at all. However, looking across at the Opposition Benches I do not see any Labour members from Nottinghamshire here to listen and take part in this important debate on the coal industry. This is not the first time that the Benches have been empty of those hon. Members. However, I shall be charitable and say that the

right hon. Member for Mansfield (Mr.Concannon) has been suffering from a car injury which he sustained on his way back from the labour party conference last year.
I was listening closely to my hon. Friend the Minister when he was talking about the future prospects and prosperity of the coal industry. I know that he speaks from fact. He visited Nottinghamshire last week and heard for himself about the record production which is taking place daily. Records are being broken in every pit in that county, not for the first time, but weekly. Thorsby colliery is turning out almost 10 tonnes per man shift. The area director has informed me that next year we shall be producing 18·5 million tonnes of coal from the Nottinghamshire coalfield, at a cost which competes with oil at $15 per barrel. That is the future for coal.
My hon. Friend the Parliamentary Under-Secretary talked about the redundancy terms that will come to an end on 31 March next year. I know that he hopes that all those who want to participate in the scheme will be able to do so. When my hon. Friend sees the chairman of the NCB, I hope that he will insist that a proper early retirement scheme is in place when the terms come to an end. In my maiden speech in the House I said that 55 would be the right age for miners to retire. That is also the aim of, and has been endorsed by, the Union of Democratic Mineworkers. Therefore, when my hon. Friend sees the chairman, I hope that he will say that when the scheme finishes, a suitable retirement age for miners in the industry should be put in its place.
I remind my hon. Friend that during that unnecessary strike, caused by we all know who, miners in working areas were not able to participate in the scheme because of the need to produce coal. Will those who have not been able to take part be allowed an extension if the NCB finds that time is not on their side?
With those few remarks, I leave it to my hon. Friend to answer my questions when he replies to the debate.

Mr. Michael McGuire: The hon. Member for Leicestershire, North-West (Mr. Ashby) must not go round deluding himself that it was the Wilson Government, as he kept reminding us, who gave the miners a raw deal. I was a pit secretary as long ago as 1957, when Jimmy Bowman was chairman of the National Coal Board, putting down massive stocks of coal. We started the market forces argument then. Nearly every pit in the constituency that I represent was closed before I came to the House. The miners got sweet nothing. I think £200 was the agreement, and that was under the great Government that the hon. Gentleman was praising.
We can say that we did not do as well for the retired miners as we should, but we shall not listen and take lessons from Conservative Members, telling us what great Conservative Governments did. Real closures took place when I was a pit secretary. The Wigan coalfield closed almost entirely, and we had the job of receiving the miners at our pit.
Hon. Members have referred to the contrast between what men get now and what they got then. There are Members of Parliament here who were working in the mines when I was a pit secretary. My hon. Friend the Member for Bolsover (Mr. Skinner) will remember that there was no pension for men who retired before 1952. and who had worked a lifetime in the pit. That was during the great Conservative Government of Macmillan, to which


the hon. Member for Leicestershire, North-West referred. Those who retired before 1952 did not get a brass farthing in pension, after a lifetime in the industry.
We decided that all working miners should contribute 4d a week for a pension for those who had done a lifetime in the industry. I remember one of the sad, yet joyful, occasions when old men came into the office—the union cabin, as we called it—the tears were blinding them, because they had got a 10 bob pension. But it had to be taken off what was known as the national assistance. Those men took pride in getting that 10 bob, which we paid for. So we have moved on a long way.
I hope that the hon. Member for Leicestershire, North-West will take a friendly rebuke. He should not tell us the nonsense that the miners got glory when the Tories were in and a rough deal when we were in. They have had a better deal over the years. We could have done more for them.
Tory Members are wrong to rebuke my hon. Friend the Member for Bolsover, not that he cannot deal with rebukes from Tories. He can deal with them equally well when he gets them from our side. I have been on these Benches with him many times when together, in debates such as this, we have raised the matter of concessionary coal, and the gap in that concession. I am glad that the Tories are joining in, although it is cold comfort. I hope that they can persuade the Minister, because he is the lad, with the Secretary of State, who can put things right. A Tory has threatened to resign if the Government put a nuclear disposal unit in his constituency. That passion must not go unrewarded. Tories can also say that if concessionary coal is not given, they will resign. That would convince me.
I want to convince the Secretary of State that this scandal has lasted long enough. We are talking about a 10-year qualification when men have worked a lifetime in the industry. That is a scandal. The money involved is little, but the reward to the widows and the few men who are still alive would be great.
All hon. Members, Tory, Labour and Liberal—I must not forget the Liberals—know that to give a widow or an old miner concessionary coal is one of the most rewarding of experiences. Some of these people have been forgotten and left by the wayside.

Mr. Phillip Oppenheim: Will the hon. Gentleman give way?

Mr. McGuire: No. I have to sit down soon because colleagues wish to speak.
Some miners are still being sacked. The NCB has been vindictive beyond measure. There is a patchwork across the country. In some areas men who have been convicted of minor offences have had their jobs back, but other men have experienced the heavy hand of vindictiveness and malicious spite and have not got their jobs back.
Anybody understanding my views on the strike will know that I sometimes disputed with my colleagues the efficacy of the strike. But that has gone. I believe that men are being discriminated against, sometimes because they are local union leaders. That is a shame. It is a bigger shame that the Secretary of State and his colleagues have not used their influence. We are not saying that every sacked miner should be given back his job. None of us is foolish enough to say that. But there should be an examination of men who were unfairly, vindictively,

sacked and who remain sacked. Until their cases are examined and a sense of fair play prevails, the sore in the mining industry will fester.
The pendulum has swung. The miners' union is almost impotent. It is divided. I shall not go into the reasons. The pendulum will swing back. The miners will not forget the treatment that they received—and they will be right not to forget.
Let us see some movement. This is our strong view. I hope that the Minister will lean on the chap on whom he can lean. Those of us who read the football reports know what happens when the manager is not quite doing his stuff and there is a threat to bring someone else in. In this case that chap is already in on a free transfer from the steel industry. When that happens, it is a question of "On your bike, mate." He should not have got the job, but now he is second in command and another will take over in a couple of months. The Secretary of State and his colleagues should get together with him and say "We want this put right." We are not saying that every sacked miner should regain his job, but we want to see fair play.
During the debate on the colliery review procedure on 5 February 1985, we were told that the miners had no need to fear any question—

Mr. Deputy Speaker: Order. The hon. Gentleman is going rather wide of the debate. I am sure that he can relate his remarks to the order.

Mr. McGuire: I am not sure whether you were judicially deaf during an earlier part of the debate, Mr. Deputy Speaker, when the issue of the review was touched upon. I wish to speak only briefly about it in taking up the remarks of the hon. Member for Berwick-upon-Tweed (Mr. Beith). I believe that the House was misled on 5 February 1985 because of the inference that was to be drawn from what the NCB was publicising at that stage. It was said that no colliery would close merely because the board wanted to close it and that any proposed closure would be the subject of an impartial and independent review. If the board is saying, "If the review leads to a contrary decision to that which we have taken, we shall still go ahead and close the pit," the debate on 5 February 1985 was a farce and the House was misled. We must ensure that there is a proper review procedure and an independent adjudication, and we should abide by the decision of the adjudicating body. I hope that the Minister will get that across to the coal board.

Mr. Roy Mason: Raising the ceiling for redundancy payments in the pits enables us to air our views on job losses, and I shall confine my remarks to that issue. Pits are closing at a faster rate than anyone imagined and redundancies are taking place on a scale which might eventually endanger the industry. This has nothing to do with a pre-arranged hit list.
One major area of concern is the National Coal Board's new accounting procedures, allied with the recommendations of the Waddilove committee's report. Instead of national, or even area, accounting procedures whereby some profitable pits might help keep some marginally unprofitable pits open, two stringent tests apply to each pit. The first test comes from the interest charges on the capital investment at each pit being attributable to that pit. The second test is that the costs of subsidence damage


caused by mining from a pit shall also be added to the pit's costs. That means that a pit that is near a built-up area is penalised to a greater extent on the second test than one in the country.
Redundancies that affect my constituents are being declared at Redbrook colliery near Barnsley. There were 1,189 men working at that pit in April 1985 and only 865 in February 1986, and the work force is to be further reduced to 500. With massive capital investment, both underground and on the surface, high interest charges have to be paid by the pit. As the pit is on the edge of Barnsley, as it were, high subsidence compensation payments have to be paid as well. The alternative is not to work the coal. To avoid subsidence compensation payments, faces have been cut back and redundancies have been declared. In the end, the pit will be lucky to survive.
I have no doubt that it could be proved that what I have described is the result of bad planning on the board's part, that it was a bad investment that led to the loss of millions of pounds and that the accounting procedures are making it difficult for the pit to survive.
Some of my constituents work at Kinsley drift, which is not far from Barnsley. The pit is only six years old. Again, there has been vast investment. I understand that it amounted to £30 million. Kinsley drift became a wonder pit and now it is on the eve of closure. The final appeal goes before the Coal Board tomorrow. Can anyone doubt that another mistake on the part of the Coal Board was made at this pit?
Members of the women's campaign against pit closures came to see me this past weekend. The campaign is based in Barnsley and its members have been demonstrating and campaigning against the closure of Kinsley drift and the effects that that will have on coalfield communities, and rightly so. As I have said, £30 million has been spent and yet the pit is to close after only six years. Who is to blame? What a waste! I have no doubt that there are many similar examples.
The Department of Energy should set up an an independent inquiry team and give it status and power to investigate the past plans and investment schemes at Redbrook, Kinsley drift and other pits in the British coalfields. All that must necessitate a vigorous and detailed examination. The NCB has made major investment mistakes, there have been many unneccessary redundancies and the British taxpayers, the House and the National Union of Mineworkers have a right to know who are the guilty men.
There are now only 135 pits in the country and a labour force of 139,000. In only 11 months—from 30 March 1985 to 1 March 1986–31,637 men have left the industry nearly all of them through redundancies. What is most disturbing is that during that time the NCB imported 12,600,000 tonnes of coal. That tonnage meant 12,000 job losses in the industry. Contracts were no doubt stepped up during the miners' strike, but we do not know for how long they must carry on.
The vast coal imports plus the present fall in oil prices have caused a serious turn of events in the aftermath of the coal strike. Many more redundancies could result and no doubt the CEGB is exploiting the cheap oil and oil-fired power stations are being prepared to come on stream. With cheap coal imports and cheap oil the CEGB has the National Coal Board over a barrel when it comes to negotiations over the annual coal contracts.
The coal industry could be seriously undermined if that situation continues for long. More pits are bound to close under present management policies and through Government indifference. The Secretary of State should step in and, if necessary, use his directive powers to cut coal imports and check the CEGB from switching to oil burning. The rundown of the coal industry has already gone far enough. If it is run down much further, if there is a high rise in oil prices and if shipping freight prices also rise, and then there is a fresh upsurge in the demand for coal, we shall rue the fact that the Minister did not act before it was too late.
The Minister should elaborate on the points that I have raised when he replies to the debate. Will the Minister tell us how many miners have taken voluntary redundancy since the end of the strike? How much has been paid out in lump sums? What is the current annual payment for redundant miners' pensions? Why is there no appeal procedure over redundancy payments? Hon. Members who represent mining constituencies are often approached when there is a difference between a miner and the NCB regarding his payments. Why has no appeal board been established? In view of the numbers involved now, and doubtless that number will rise, why has that board not been established? Finally, the NCB and the Minister have been able to say that all the redundancies have been voluntary and that there have been no compulsory retirements. Will the Minister assure the House and the mineworker's union that that will continue to be the case?

Mr. Spencer Batiste: I will intervene only briefly in the debate, as other hon. Members wish to speak, but several points have arisen on which I would like to comment.
My first point relates to the question of concessionary coal, but I do not want to go over all the points that have been argued so eloquently on the Floor of the House on that issue already this evening. However, I believe that if the Government could find the relatively small sums of money involved it would do a great deal to put right an injustice that has existed for a long time and would earn much good will for the Government.
I should like to link my first point with a request to my hon. Friend the Minister to consider what further progress has yet to be made in relation to the miners who took redundancy after the strike began and who have lost out on the full benefits to which they reasonably thought they were entitled.
During the debate reference has been made to various industrial tribunal cases and to the NCB's attitude in not taking back miners as a result of the decisions of those tribunals. If the NCB took back miners whom it has dismissed and who it reasonably believed had been guilty of violence and intimidation during the strike, that would make a mockery of the courage of the working miners who stood by the NCB during the strike and would go against the principles for which the Government have fought and for which the country has paid so dearly. The NCB must be satisfied that it has the full support of the House or at least of Conservative Members in making sure that there is no place in the mining industry for the wreckers, the violent and the intimidators.
Finally, let me make a general comment on the future of the coal industry, on which there has already been much comment. Clearly the industry's future and survival must


depend on its being profitable and my hon. Friend's announcement showed that the industry is now close to being able to stand on its own feet, which must be good news and reassuring to all who work in the industry.
Obviously, however, a cloud has been cast by the drop in oil prices and that must reflect upon the targets and profitability of the mining industry. But will my hon. Friend recall that oil prices can go shooting up just as fast as they have come down and all it needs is for the oil sheikhs to meet together and agree on production cuts for oil prices to start rising again. If we have learnt one lesson from the 1970s, it must be that we need an energy policy that ensures not just the profitability of the industries that produce energy, but also certainty of supply, and there can be no better certainty of supply than from coal that is mined in Britain.
For our strategy and our future we need a diverse energy market. We need diverse energy resources, but within that diversity coal must have an important part to play.

Mr. Dick Douglas: I notice that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) is in the Chamber, and he is a singular reminder of the vagaries of oil prices and markets. Those of us who have a bit of a memory will acknowledge that his stricture during the energy crisis in 1973 was that we should brush our teeth in the dark. We should remember that oil prices have a way not only of going down but of going up fairly rapidly. However, I do not want to discuss energy policy this evening because time does not permit.
The hon. Member for Elmet (Mr. Batiste) said that the NCB had to face the results of industrial tribunals. I want to put on record the course taken by my constituent, Mr. Robert Young. The Under-Secretary will know that we met him on that matter on 5 March. I am informed that my constituent has had an offer of reinstatement by the NCB. The vagaries of the procedures involved show the degree of vindictiveness and the extent to which the NCB was willing to go—even to offering perjured evidence at a tribunal—in order to deny Mr. Young his democratic rights.
I have reported the matter to the Minister. We know that Mr. Young was charged and fined £75 for a breach of the peace. He was interviewed on 19 August by the colliery manager. He went to an industrial tribunal on 13 January and there the NCB said that it was not contesting unfair dismissal, but was not willing to re-engage Mr. Young because of his behaviour during the interview at Comrie colliery.
As I have told the House previously, my constituent had the presence of mind to tape proceedings. Had he not done so he would have been damned to perpetual unemployment in so far as any chance of being re-engaged or reinstated by the NCB is concerned. I use this example to demonstrate that we in Scotland had 206 victimised, not dismissed, miners. At present, we still have 127 victimised miners. Ten of my constituents are similarly placed as are many more who are not my constituents but who are employed in pits in my area.
The NCB was willing to spend public money defending a case that was indefensible. I want that put on records an illustration of the NCB's mind in Scotland. If the Minister wants to enhance his reputation and that of the coal

industry in Scotland, he should take urgent steps to wipe the slate clean. My constituent fears that there is the danger that, having got the offer of reinstatement, he will return to the colliery, Comrie, and find that it is under threat of closure. Those who have knowledge of the mining industry know that if there is no redevelopment, the colliery is almost certain to be scheduled for closure.
The Minister ought to take urgent steps to put the record straight with regard to victimised miners. He ought to give an assurance to the Scottish mining industry that there will be adequate capital development and security of employment for miners in my area and throughout Scotland.

Mr. Ron Davies: I wish to raise a constituency problem which is related to the orders that we are discussing tonight. It concerns a group of employees who were formerly employed by the National Coal Board but who are now employed by an engineering company which is a subsidiary of the NCB — the Tredomen Engineering Works at Ystrad Mynach.
I have been chasing the Minister, his predecessor the Secretary of State, the NCB, the area director and the chairman of the NCB to get some satisfaction for hundreds of miners who have been made redundant due to the decline of the coal industry, and many of whom have been denied payment from the redundant mineworkers payments scheme even though they are entitled to payment from the mineworkers pension scheme. In 1983 I asked the Minister's predecessor whether he would consider making provision for the payment of the RMPS to employees of Tredomen. In reply, he said that Tredomen, though a wholly-owned subsidiary of the National Coal Board, was a limited company engaged in the manufacture of specialised mining equipment not only for the board but for other organisations, and that it was not the kind of establishment providing services ancillary to collieries for which the RMPS was designed. The Minister said that the answer was no for three reasons: first, that the company was a wholly-owned subsidiary of the NCB and it was a limited company; secondly, that the company did not manufacture exclusively for the board and, thirdly, that it was not the type of establishment for which the RMPS was designed. Yet on page 14 of these orders it is made clear that the orders apply to people employed not only directly by the board but by its subsidiaries.
I have confirmation from Mr. Ian MacGregor, the chairman of the NCB, that for the past eight years the Tredomen Engineering Company did between 95 and 98 per cent. of its work directly for the NCB. If that is not working exclusively for the NCB, I do not know what is.
Payments can be made from the RMPS to people who are employed in estate and house maintenance depots, in headquarters and regional offices and establishments, civil engineering depots and workshops. They are covered by appendix 1 on page 45 of the order. In 1973 the Tredomen employees, employed directly by the NCB, were told in a letter that their conditions of employment would be protected on the transfer of their employment from the NCB. If all the other categories of people can receive payment from the RMPS, the workers facing redundancy from Tredomen should be entitled to receive it. I ask the Minister to consider this matter. I am awaiting a detailed reply on these specific points.

Mr. Allen McKay: I support what my right hon. Friend the Member for Barnsley, Central (Mr. Mason) said about Redbrook. Investment in collieries ought to be examined. There is such a long lead-in time that it is totally unfair to load the cost on one colliery. The investment period in Redbrook started about 15 years ago when plants in the Barnsley area were designated for alteration and rejuvenation. It is entirely wrong to load on to the 450 men in one colliery the capital costs of what would be sustained by at least
1,500 men.
I should like to ask about people who do not receive unemployment benefit. People who go in for the business scheme are normally allowed up to £40 per week from the Department of Employment to help them with ideas for creating a small business. The £40 depends upon the receipt of unemployment pay. My workers are not in receipt of unemployment benefit and when they apply to be considered under the small business scheme they are turned down. I have written to the Under-Secretary in the Department of Employment, and perhaps the Minister will take up the matter on an interdepartmental basis to see whether he can get rid of what is clearly an anomaly.

Mr. David Hunt: I say to my hon. Friends the Members for Amber Valley (Mr. Oppenheim), Leicestershire, North-West (Mr. Ashby), Sherwood (Mr.Stewart) and Elmet (Mr. Batiste), and to the hon. Members for Midlothian (Mr. Eadie), Bolsover (Mr. Skinner), Berwick-upon-Tweed (Mr. Beith), and Makerfield (Mr. McGuire), the right hon. Member for Barnsley, Central (Mr. Mason), and the hon. Members for Dunfermline, West (Mr. Douglas), Caerphilly (Mr. Davies), Barnsley, West and Penistone (Mr. McKay) that I do not have sufficient time tonight to deal adequately with the points they raised, but I shall write to them, just as I shall respond to those hon. Members who have not caught your eye, Mr. Deputy Speaker, about any points they raise with me in correspondence.
My hon. Friends the Members for Elmet, Sherwood and Leicestershire, North-West spoke about the announcement I made of the ending of the scheme. When the scheme was introduced the then Minister for Power, Mr. Richard Marsh, made it clear that it was a temporary scheme to provide a breathing space. On 5 December 1967, Mr. Marsh said:
Therefore, the purpose of the Bill is to give the industry a breathing space to help it to get the level of productivity to enable it to compete with other industries."—[Official Report, 5 December 1967; Vol. 755, c. 1269.]
We have seen a marvellous breakthrough in productivity. There is a new pride in the industry. I found that last week when I went underground at Bilsthorpe with my hon. Friend the Member for Sherwood. As he constantly reminds the House, as do my other hon. Friends, the industry must never forget the debt it owes to the courage and determination of working miners. I am sure I shall find the same pride when I go underground with my hon. Friend the Member for Leicestershire, North-West at Donisthorpe this week as I found at Point of Ayr, Monkton Hall, Ellington, Wearmouth, Wistow, Lady Windsor Abercynon, and other collieries I have visited since the end of the strike.
Productivity records have been broken week after week as miners fight to achieve the viable competitive industry

that is the only sure way to secure their jobs in the long term. I say to my hon. Friends who raised with me the matter of concessionary coal that I fully understand the strength of feeling that exists on this issue and the disappointment felt by mineworkers who, when they were working contributed to coal pools, but under the rules of the schemes to which they have contributed have no entitlement following redundancy. I listened carefully to my hon. Friends in the debate and also to what they said to me prior to this debate, but I fear that against the background of the industry and the decision of successive Governments, I will be able only to reach the conclusion of previous reviews: that further extensions to existing arrangements would not be justified—

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).

Question put and agreed to.

Resolved,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1986, which was laid before this House on 10th March, be approved.

Resolved,
That the draft Coal Industry (Limit on Payments in respect of Redundant Mineworkers) Order 1986, which was laid before this House on 10th March, be approved.—[Mr. David Hunt.]

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &amp;c.).

BROADCASTING

That the draft Broadcasting (Local Sound Broadcast Programme Contractors' Additional Payments) Order 1986, which was laid before this House on 4th March, be approved.—[Mr. Sainsbury.]

HARBOUR, DOCKS, PIERS AND FERRIES

That the draft Ports (Finance) Act 1985 (Increase of Grants Limit) Order 1986, which was laid before this House on 7th March, be approved.—[Mr. Sainsbury.]

Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith pursuant to Standing Order No. 80(5) (Standing Committees on European Community documents).

POWERED INDUSTRIAL TRUCKS

That this House takes note of European Community Document No. 6893/79, a proposal for a Council Directive on the approximation of the laws of the member states relating to self-propelled industrial trucks and of the supplementary explanatory memorandum for the Department of Trade and Industry dated 28th November 1985 and 17th February 1986; and accepts the need substantially to reduce current non-tariff barriers to the exports of United Kingdom-based manufacturers whilst ensuring a satisfactory level of health and safety protection.—[Mr. Sainsbury.]

Question agreed to.

PETITION

Sunday Trading

Mr. Tom Sackville: I beg leave to present a petition to the House on behalf of 1,500 of my


constituents. It reflects their deep conviction that Sunday has special characteristics as a day of rest, recreation and worship for the benefit of family and community life. They believe that the current legislation before Parliament allowing for unlimited trading on Sunday will diminish those characteristics of Sunday.

To lie upon the Table.

English Estates

Motion made and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]

Mr. Michael Fallon: I am grateful for the chance to instigate a short debate about English Industrial Estates Corporation, called English Estates. It is one of England's biggest developers and is certainly one of England's largest high-tech developers. That may not be as well known as it should be in the House, but it is known to us in the north-east, because over two thirds of its developing industrial footage lies in the northern region, just as its headquarters do. It is appropriate that a northeast Member should be sponsoring a debate about English Estates and allowing us the opportunity to explore with my hon. Friend the Under-Secretary the role of English Estates nationally and its particular importance for a region such as the north-east.
This is also a timely debate, because last week my right hon. Friend the Secretary of State was able to announce a substantial increase in the funding for English Estates over and above that which was originally feared. It was originally suggested that some £25 million might be available for that year, and for each of the next three years. My right hon. Friend has been able to ensure spending, although perhaps not funding, of some £32 million. That is a modest increase on this year's £30·5 million. It will help English Estates to carry forward the programme that it envisaged last year, and to finance continuing development in the north-east, especially in the counties of Durham and Cleveland. I understand that that forward programming will include a substantial development in Darlington, and I hope that my hon. Friend the Under-Secretary may be able to say something about that.
I welcome the increase in funding and the restoration of what was originally threatened to be a substantial cut. I particularly welcome the pledge that was originally given on 25 May 1984, that the provision made in English Estate's budget for the development at Chatham and the west would not affect its programmes and commitments in our assisted areas. There has been good news about funding and I hope that my hon. Friend the Under-Secretary will be able to confirm that.
Another important aspect for English Estates, in securing the medium-term future, is the corporation's management. I was a little disappointed that the efforts to put together a management-led buy-out last August now appears to have floundered. There would have been considerable advantages for the Government, in both the capital receipts that would have accrued from such a buyout, and the knowledge that Government programmes would still have been commissioned and carried forward by English Estates, as a private company.
There would also have been advantages to English Estates. It would have been able to set slightly longer-term objectives than the Government are often able to set for it. It might have been able to move towards a more broadly based and developed company, free of some of the constraints that Government and Treasury, of necessity, impose on such a public body. It would also have been free from the public expenditure survey committee lobbying and so on.
The company might also have been able to replace some of the more strict terms laid down by Whitehall for


the pay and conditions of staff, with a more commercial and realistic set of incentives and awards based on performance. Although that has not happened, I hope that the moves towards improved management will not be relaxed, and that initiatives such as the northern subsiduary of English Estates will be pursued. I also hope that on pay and reward for staff, the Treasury might be persuaded, once it has resolved the small matter of the English Estates report and accounts for last year, to adopt in turn a more flexible approach.
Another aspect which is relevant to the future of English Estates is the decision which will soon be made to end the three development corporations in the north-east—Aycliffe, Peterlee and Washington. Their life was extended again by the Government to 31 March 1988, which is less than two years away. I do not believe that there is any realistic prospect of a further extension being granted, even if we were in favour of it.
It is appropriate for the Government to consider soon the bodies that are best suited to take over, not simply the physical estates of those three new town corporations but their role in attracting inward investment and in making the localities more attractive places for development and industrial growth.
I realise that this is not entirely a matter for my hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry and that his Department has to have consultations with another Department about it. I submit that English Estates, properly organised, is the best body to take on the development corporations' role. It is already based in the north-east. I believe that it could happily pool the estates of the development corporations with its own industrial estate to form a larger industrial portfolio. It might be able to sell the attractions of the north-east to a wider market, internationally and nationally, it might be able to retain some of the skills and expertise of the existing development corporations. It would certainly be able to ease the transition period by taking over an increasing part of the management of the estates.
Assisted areas, such as the north-west and the northeast, are crucial to the role of English Estates. I am not denigrating the developments undertaken at Chatham and in the west midlands. I understand the reasons for the involvement of English Estates in those areas. However, I believe that the greater challenge lies in the north of Britain, especially in the north-east, because that is where the greater development potential lies. In the north-east we have perhaps the greatest potential of any English region for further and future development. We have the space which the modern company needs. We have an abundance of attractively priced land and housing. We have the attractive countryside, which the modern company likes to have around it. Too much of that land lies undeveloped.
The register of publicly owned land, which was set up by the Government in 1980, reveals that a huge number of acres in public ownership are unused, undeveloped and awaiting development. There are more than 4,000 acres in Tyne and Wear, nearly 4,000 acres in Cleveland, nearly 3,000 acres in the county of Durham and nearly 2,000 acres in Northumbria—a total of just under 13,000 acres of publicly owned land—ripe for development but sat on by local councils. My hon. Friend the Under-Secretary of State may wish to consider when local councils are not prepared to develop land or to let other people have the

chance to develop it whether the Government, instead of ordering the land to be sold, should invite English Estates to develop some of it.
In the north-east we have not only space but resources. There are the natural resources of energy, water, offshore gas and coal. There are also the human resources—the skills in engineering which have been transformed into skills in the new technologies and the biotechnologies. It is often forgotten that 16,000 people work in the north-east in electronics and another 5,000 work in pharmaceuticals.
There is a fear in the region that we lose out to the south-east in high technology and new technology development and that too much applied research is heavily concentrated in the south. A recent survey shows that plants in the south-east have an average of 21 people employed directly in research and development. An equivalent plant in the north-east has only nine. The region has a lower record of product innovation. Those are all reasons why the role of high-tech development and the development of high-tech sites is pivotal to the future attractiveness of the north-east. That is why I believe that a successful English Estate, with its management given more freedom and its funding put on a surer footing, working increasingly in partnership with the local authorities and with the new towns as they come to the end of their natural life, is one of the keys that could unlock the door to a new and more prosperous north-east.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I thank my hon. Friend the Member for Darlington (Mr. Fallon) for his timely observations this evening, not least because the moment is approaching when we will be able to confirm, as a result of his inquiries, the decision that we can make regarding his constituency, but also because it is right to give a full airing to the undoubted benefits and advantages of industry and commerce building up their operations in the north-east. The undoubted advantages of Northumberland and Durham in particular are well worth restating at this juncture in our deliberations on English Estates.
Factory building has been an intrinsic part of successive Governments' regional policies for the past 50 years. Indeed, in the mid-1930s it was virtually the first and only form of regional assistance. Since that time a wide range of intiatives has been developed to encourage firms to set up, relocate or expand in the depressed areas of the United Kingdom. Over this time the factory building programme has evolved as an essential instrument of those policies, both complementing other measures and operating in its own right as an effective means of attracting employment to specific locations within the assisted areas.
Our policy on English Estates, and its recent record, represents an outstanding success for the Government. That is my third reason for welcoming my hon. Friend's speech.
On taking office in 1979, the Government came to the conclusion that measures intended to encourage business to set up, locate or expand in the assisted areas would not succeed if firms could not find suitable factories, workshops and offices. We asked ourselves if the private sector could be relied on to provide all the factories and industrial premises that would be needed in the assisted areas to ensure the success of our regional policies—a job it appeared to be doing quite adequately in the rest of


the country. Unfortunately, it could not. Some of the investment appeared to be too high-risk and to offer too low a rate of return to attract the large amount of institutional investment needed to ensure the adequate provision of suitable premises.
Finally, we asked ourselves whether English Estates was doing the best possible job in providing these premises. I am afraid the answer to this final question was a definite no. Civil servants in Whitehall and in the region had been telling English Estates what type of property to develop and where to develop it, selected the occupants and told English Estates what rents to charge. The consequences of their decisions are still plain to see—large, echoing, empty factory sheds that provided impressive evidence of the previous Government's concern for the regions when they were being constructed, but which have stood empty since then and demonstrated that concern is not enough. The factories stand as mute evidence to a failed policy of building monuments to the past rather than workshops for the future. In order to turn equal concern for the problems of these areas into economic regeneration, it was necessary to understand industry and commerce's basic requirements for new premises. This could be done only by those versed in the disciplines of the market place.
We quickly concluded that, although it was necessary to continue the advance factory programme, it was a job for property development experts and not for civil servants to carry this programme through. We therefore strengthened the board and management of English Estates with real experts in property development, and gave it financial and commercial objectives and broad policy guidelines to which to work. It was told by us to operate in the assisted areas, building factories where there was an underlying need in the market, but only in those locations where there was no prospect of finding private sector investors to undertake the development. We told it to concentrate on the type of development that would provide the most employment and bring a better balance to local economies. It was told to sell off the property as soon as it could, either to the tenants or to private investors. It was also told to secure the maximum rent that it could, without actually turning tenants away from factories that would otherwise stand empty.
With these objectives in view, English Estates was told to plan, develop, market and manage the development programme, while exercising its best commercial judgment. The many civil servant posts previously required for this work were saved and English Estates took it on with no overall increase in its staffing level.
The policy has proved to be an outstanding success. The new team at English Estates quickly identified an underlying demand for small units; many businesses in the assisted areas could not set up or expand because there was simply nowhere for them to carry on a business. English Estates pioneered the development of small factory units and the special rental terms and management techniques necessary to attract and nurture small business tenants.
English Estates now manages over 3,000 small units and many hundreds of companies owe their existence to these English Estates developments. These companies have their roots in the assisted areas and as they grow, as many will, they will provide an increasing number of jobs firmly based in the areas where they were born. I know that

my hon. Friend is most anxious that this point should be borne in mind. Growing mighty oaks from the little acorns may be a slow business, but it stands more chance of success in the longer term than attempting to transplant mighty oaks into an alien soil.
Under the old policies, English Estates was restricted to building premises for manufacturing industries. Its estates grew up without the mix of warehousing and offices that is so essential for balanced economic development at the local level. Under the Conservatives it has built warehousing and developed small suites of offices as well as factories. It has found institutional investment, up to £20 million so far, to help finance some of these developments. These units have found a ready market for businesses in the service sector that are anxious to service the manufacturing industries on the industrial estates. As a consequence, the estates are becoming more desirable locations for thriving modern industries.
Perhaps the most innovative developments of all have been those in response to this Government's policies of encouraging the interaction beween higher educational establishments and businesses engaged in the new technologies. English Estates is now the largest single high-tech developer in the country. Its technology transfer centres on university campuses provide a model which private developers have followed in the more prosperous parts of the country. At Bradford university, for example, it has provided one of the most successful high-tech developments in the United Kingdom. Similar developments have now been completed at Leeds, Hull, York and at Durham, and more are planned.
By means of this type of development, English Estates has provided a focus in the assisted areas for growth and prosperity in the industries of the future.
The policy of selling factories at every possible opportunity and getting the best rents we could from the market has paid off handsomely. As a result, English Estates returns to the Government nearly £2 from rents and factory sales for every £3 which the taxpayer invests in its programmes.
The success of the policy is demonstrated by the speed with which English Estates has filled its new units. Every one of the past five years has seen a record number of new factories occupied. The area of vacant factory space is now about half of what it was five years ago. In the north-east of England, lettings have shown a particularly encouraging trend. Not only is English Estates letting a record number of factories to new tenants there but over the past year a record number of existing tenants have expanded, creating more jobs in the process.
All this has been achieved by English Estates while operating under a hitherto bureaucratic financing system which completely divorced its commercial performance from the size and content of its development programme. The Industrial Development Act 1985 was introduced to correct this and provides the basis for a more commercial funding system. From 1 April this year English Estates will be able to use its income from rents and factory sales to fund its capital investment. My right hon. Friend the Secretary of State announced to the House on 19 March how these new arrangements would work in practice.
As for the actual size of the programme, over the past four years we have provided an average of £32 million grant-in-aid for English Estates to invest in new factory development in the assisted areas and in recent years in Chatham. In return, English Estates has surrendered about


£22 million in receipts from rents and factory sales in each of these years. On this basis, the net funding has averaged some £10 million a year. This year, English Estates will spend £31·7 million on capital investment, including about £2 million on the development in Chatham.
Next year, English Estates will spend at least £32 million on new investment but all of that will now go into the assisted areas. We have agreed to provide £12·6 million grant-in-aid towards that investment. Quite separate financing arrangements have been agreed for the development at Chatham, which will no longer effect the size of the programme that English Estates can carry out in the assisted areas. If English Estates matches its recent performance on factory sales and rents—and we have every reason to believe that it will in fact do better than that—more money should be available for it to build up a reserve for future years or to spend on more capital investment. We have high hopes that an even higher proportion of future investment will be funded from its own resources.
As for the £32 million to be spent in the assisted areas, the actual allocation to various locations within them is a matter for English Estates. It will allocate those funds to the travel-to-work areas in the assisted areas taking account of the level of unemployment in each. Those allocations have yet to be worked out, but, I am delighted to report to my hon. Friend that English Estates now has sufficient funds to undertake a £1 million development in Darlington shortly. English Estates is about to discuss with local interests how best to invest this sum to maximise job creation there.
We shall, of course, continue our policy of asking the board and management of English Estates to use their

development expertise and management skills to provide the type of development that is best suited to the needs of each location in terms of generating the most jobs for the money. English Estates is now in a position to reopen negotiations and discussions with interested bodies, including the local authorities in the assisted areas, concerning the type of development that it will be undertaking in the years ahead.
It is no secret that we have discussed with the management of English Estates whether we should now go the full way and privatise its organisation. But we have come to the conclusion that the present system, with English Estates implementing our policies through the disciplines of the market place, will continue to provide the most responsive and cost-effective means of carrying out the advance factory programme.
I opened by saying that I had a success story to tell, and I would like to close by saying that we hope for even greater success under a more commercial and market-orientated system in the future. All that has been made possible by the dedication and professional expertise of the board, management and staff of English Estates.
I should like to conclude by saying that I have listened carefully to what my hon. Friend said about the future of the three development corporations and I shall, as he invited me, refer his remarks tomorrow to my colleagues at the Department of the Environment, who will, no doubt, be getting in touch shortly in response to my hon. Friend's question.

Question put and agreed to.

Adjourned accordingly at two minutes to One o'clock.